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Interest rates are one of the most crucial yet variable aspects of buying a home in the Beehive state—but what is happening with mortgage rates in Utah?
Every year, thousands of Americans choose to purchase their home in one of the most desirable states in the union. Surrounded by mountains and the beauty of mother nature, it’s no wonder Utah is so popular with homebuyers.
Could the new year spell a break in the mortgage rate increases we’ve seen in the year before? Could borrowers and mortgage lenders see a welcome heating-up in the real estate market for 2023?
Let’s look at what mortgage rates are doing in Utah and why first-time homebuyers and seasoned mortgage loan borrowers look to this beautiful state as a place to buy their homes.
Current mortgage rates and real estate trends in Utah
On Dec. 29, 2022, Freddie Mac released the latest results of its survey, which showed the 30-year fixed rate mortgage averaged 6.42%.
On the other hand, the 15-year fixed-rate mortgage averaged 5.68%, a slight decline from previous weeks when it averaged 5.69%.
Freddie Mac’s Chief Economist, Sam Khater, is quoted as saying that the housing market continues to “remain in the doldrums with declining sales, inventory, and prices.”
Declines in sales and the deceleration in home prices began in earnest in 2022 but have somewhat leveled out since then.
“While the intensity of weakness is moderating,” Khater said, “the market continues to decline.”
The Freddie Mac economist concluded his statement by suggesting that “forward leading indicators” point to continued “weakness throughout the winter.”
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Are Utah mortgage rates expected to drop?
The National Association of Realtors Chief Economist Lawrence Yun described the pre-pandemic era as a “homebuying frenzy” when mortgage rates in Utah were at some of the lowest levels some people had ever seen.
That changed in 2022, with existing-home sales expected to cap off the end of the year at 16% lower, a level not seen since 2014. New-home sales are also projected to show a decline of 17% when all the dust has settled.
“Mortgage rates,” Yun said, “are the lifeblood that drives homes sales.”
Many real estate professionals were pleased to see the 30-year FRM percentage start to drop on Nov. 10, 2022.
This trend would continue almost entirely throughout the year’s final weeks before a slight increase in the last week of December (6.27% to 6.42%) spoiled the streak.
Will the downward trend of mortgage rates continue?
Post-pandemic mortgage rates, Yun believes, have already peaked.
Like other economists, Yun points to an unusually high spread between the Treasury and 30-year fixed-rate mortgages, which have historically had very close ties. The gap between these two rates traditionally stays relatively even, meaning a lower Treasury rate (which closed last year at 3.88%) could easily indicate a similar decline in the 30-year rate.
Continued market normalization, Yun added, will be “an opportunity for rates to decline even further.”
He also predicted that mortgage rates would “settle” at 5.7%—but not until the very end of 2023.
Will the housing market change this year in Utah?
Yun forecasted 2023 would see prices remaining stable and that 4.78 million existing homes will trade hands.
His presentation included this prediction during the Dec. 13, 2022, annual year-end Real Estate Forecast Summit.
Yun also predicted that home sales would decline by 6.8% below last year, and the national median home price would reach $385,800—which is only a 0.3% increase from 2022.
Slight gains or losses in housing prices will vary across the country except for California, where Yun expects a significant price drop.
If rates continue to stabilize and inflation slows, it could spark more demand for housing. Such a market boost could increase competition for homebuyers in the springtime, traditionally when the market thaws out, and sales begin to rise.
What about rent prices in Utah?
Yun predicts rent prices will rise 5% this year, already following a 7% increase last year.
While it’s not great for tenants in Utah, it’s good news for landlords and those interested in investment properties.
Finally, Yun thinks that the foreclosure rates for this year will remain at historically low levels, making up only 1% of all mortgages in the U.S.
If you’re currently renting your home and are wondering if 2023 is the right time to make the big jump to purchasing—there are some great resources you can use to make your decision easier.
Calculate monthly payments with a good mortgage calculator
Figuring out how much of a mortgage loan you can afford can be a tricky business.
Many financial factors will be analyzed to determine what kind of mortgage payment you can reasonably pay.
Some of these factors include:
- Upfront funds for a downpayment and closing costs
- Credit score
- Loan term you choose
- Insurance premiums
- Annual percentage rate
The advantage of a good mortgage calculator is that it gives you a clearer picture of what loan amount you can afford with greater ease.
Homefinity’s mortgage calculator is free for anyone to use, and it’s a great place to start your homebuying journey.
However, even the best affordability or mortgage calculator can only give you an estimate of your best mortgage options.
Get started with a preapproval from Homefinity
A prequalification or preapproval through a professional loan officer has a dual benefit for borrowers.
Both processes will give you a better idea of what you can afford in a mortgage. But having a preapproval letter in hand can help strengthen your bid when it comes time to make an offer.
Whether you’re looking for a new home loan or refinancing your home, a loan officer at Homefinity can recommend the kind of loan program (FHA loans, VA loans, jumbo, etc.) that would best suit your financial scenario.
Get started with a conversation with one of our dedicated and knowledgeable loan officers today, and let’s see how we can find a solution to your homebuying or refinancing needs.
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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