That is if the Fed continues to hold off on additional rate hikes, according to Mortgage Bankers Association chief economist Mike Fratantoni.
“The new set of economic projections shows that the median FOMC member expects two additional hikes by the end of 2023,” Fratantoni said. “Unfortunately, this only adds to the chances that the economy will slow sharply. Given the banking challenges that have already resulted in a tight credit environment, the threat of further hikes, baked into medium-term rates today, will only further slow economic activity. We expect that economic conditions will develop in such a way that further hikes are not needed, but this new information impacts markets immediately.
Read more: Federal Reserve interest rate pause – brokers react
“Mortgage rates have generally increased in the past month, and this has slowed the pace of housing market activity, as potential homebuyers have been very sensitive to any changes in rates this year. We expect that mortgage rates will drift down over the second half of the year as the economy slows and the Fed reacts accordingly by holding off on further rate hikes.”
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