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As inflation recedes and the American economy preps for what could be a modest recession, mortgage rates in Ohio are widely expected to fall this year.
Those who are first-time homebuyers or have secured a home loan in the past quickly come to realize how a few percentage-point-change in rates can mean extra thousands on your mortgage payments.
Let’s look at an overview of what mortgage rates in Ohio are doing at the beginning of our new year.
We’ve also collected several expert reports and analyses of the future of mortgage rates for Ohio and the country.
What is happening with mortgage rates in Ohio right now?
Homebuyers who have been priced out for the last year could find a more welcoming real estate market in 2023, with lower interest rates already appearing at the tail-end of last year.
This prediction is good news for those interested in buying a home or refinancing their existing mortgage in the Buckeye state.
Higher borrowing costs have restricted demand and affordability for several months now, and a continuing supply shortage is still propping up home prices.
Freddie Mac’s current report on Ohio mortgage rates
The latest report from one of the most important enterprises regarding current mortgage rates, Freddie Mac, shows that interest rates have continued their welcoming downward trend for the new year.
Last year, the 30-year fixed rate mortgage rate hit a peak of 7.08% in November but has been cooling down since.
Apart from a slight rise at the tail end of 2022, mortgage rates have steadily moved into more affordable territory.
As a result, the report states purchase demand has buyers “jumping in and out of the market” in tandem with fluctuating interest rates.
Jan. 12, 2023, saw the 30-year fixed rate mortgage at 6.33% with a four-week average of 6.38% due to the small rise at the end of 2022.
On the other side, the 15-year fixed rate mortgage settled down to 5.52% with a four-week average of just 5.66%.
But does this mean it’s time for Buckeyes and other American’s looking to move to Ohio to start searching for a home?
While it’s a good strategy to keep an eye on the current Ohio mortgage rates, it’s also valuable to know what real estate experts say might happen to rates in 2023.
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Ohio mortgage rate predictions for 2023
The most recent housing forecast from Fannie Mae predicts the first quarter of 2023 will see the 30-year fixed rate mortgage at an average of 6.5% but will only drop as far as 6% by the close of 2023.
Inflation decelerated again in November 2022, as measured by the Consumer Price Index. The ESR Group (Economic and Strategic Research) expects the Fed to closely monitor wage growth metrics to help determine how long its restrictive monetary policy regimen should continue.
With a mild recession being a likely case scenario for the first quarter of this year, the ESR Group notes “as a plausible scenario” that the Federal Reserve will begin to cut the federal funds rate by mid-2023.
Doug Duncan, the Senior VP and chief economist at Fannie Mae said in a December statement that he expects housing demand to continue to slow, despite mortgage rates coming down.
Duncan added that “house prices, though certainly slowing [and in some cases declining], remain elevated compared to pre-pandemic levels.”
Freddie Mac prediction: 6.4% average
Not surprisingly, Freddie Mac’s Quarterly Forecast predictions for 2023 aligned with its sister corporation Fannie Mae.
The mortgage juggernaut put the 30-year fixed mortgage rate between 6.6% and 6.2% throughout 2023. The average annualized rate, they predicted, would be 6.4%.
The 15-year mortgage rate traditionally follows the same pattern as 10-year Treasury yields—meaning the 15-year rates will likely be flat given the current path of these yields.
However, recent months have shown the spread between 10-year Treasurys and the primary mortgage rate has widened as lenders adjusted to “dramatically lower transaction activity” and the recent volatility in interest rates.
If the gap between these two markers of the economy gradually returns to historic averages, it concluded, then “mortgage rates will decline modestly over the next year.”
Mortgage Bankers Association prediction: 5.7% average
The Mortgage Bankers Association (MBA) released a Mortgage Finance Forecast at the end of last year that puts the most popular mortgage loan, the 30-year FRM, at 6.2% for the first quarter of this year, eventually falling to 5.2% by the end of 2023.
The overall national average for 2023 rates, MBA VP and deputy chief economist Joel Kan predicted, would be 5.7%.
However, Kan stated there still might be some outlier months in 2023 that “buck the trend.”
The economy (and life in general) can produce unforeseen events that could cause rates to rise for a month or two.
“The baseline is one thing,” Kan stressed, “but there’s always room for surprises.”
How to calculate your monthly payment with a mortgage calculator
As an early part of the homebuying process, borrowers should figure out what sort of monthly payment they can afford.
There are several ways to do this. One of the best tools to employ is a mortgage calculator (sometimes called an affordability calculator). This online tool is a simple, free, and easy-to-use program that can give you a basic insight into your ability to afford a new home.
What you’ll need for calculating monthly payments
- What sort of loan term you might choose
- Your monthly income
- Your monthly expenses
- The percentage of downpayment you plan to use
- A potential mortgage interest rate
- An estimated percentage of your property taxes and fees
- An estimated percentage of your property insurance
- And last but not least—the home value
Get started with a Homefinity preapproval
While an affordability calculator can give a general picture of what new homeowners might pay, a preapproval is the most accurate way to learn what loan amount you can afford.
Plus, preapprovals can help you get the home you want when the time to buy arrives.
Preapprovals are done with the assistance of a professional mortgage loan officer who can include any hidden costs that the average homebuyer might not consider. Beyond the downpayment, closing costs, credit scores, etc., that most folks think comprise a loan product, there are other factors to consider.
Other loan types, like government-backed loan programs (FHA loans, VA loans, USDA, etc.) and downpayment assistance programs from the state (from the Ohio Housing Finance Agency, for example), can be used to save you money and get your home.
Reach out to one of Homefinity’s dedicated and seasoned loan officers today and get started with securing your future home in the midwest state.
Pre-approval is based on a preliminary review of credit information provided to Fairway Independent Mortgage Corporation, which has not been reviewed by underwriting. If you have submitted verifying documentation, you have done so voluntarily. Final loan approval is subject to a full underwriting review of support documentation including, but not limited to, applicants’ creditworthiness, assets, income information, and a satisfactory appraisal.
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