CCM Trend Tracker – 2023 Insights

Q: What should we be expecting to see in 2023? Will rates continue to fluctuate?

While we don’t expect to see a big drop in interest rates back to the levels of 2020 and 2021, the bear market in bonds has ended and the day-to-day volatility has now started to subside. On the home sales front, I think it’s going to take some time for us to get back to the kind of home sales levels that we had before the pandemic. Market experts anticipate a slow decrease in interest rates throughout the year. I think it is going to slowly trend in the right direction. 

Q: At the end of 2022, home prices started to come back down. Is that a trend that we should expect at the start of the year?

A lot of that will differ based on your own particular housing market, and how hot things got relatively speaking in 2021 and 2022. Overall, housing prices are predicted to stay relatively flat for the next year or two as borrowers’ incomes continue to increase with higher rates of earnings growth. 

Q: Should consumers take advantage of things like HELOCs or Closed-End Second Mortgages in this environment where inflation continues? 

While home equity loans, HELOCs and Closed-End Second Mortgages are still viable alternatives for borrowers who have equity but don’t want to refinance their mortgage, I expect to see cash-out refinances becoming more popular in 2023. 

HELOCs and second mortgages are priced on prime. At the end of the first quarter, we will have Fed funds at 5%, which means prime will be at 8%. That’s going to take a lot of that business that was going into HELOCs and second mortgages and convert that over to cash-out refinances if you can get a cash-out refinance at a rate like 5.25%. 

Q: CCM offers a variety of temporary buydown programs that lower borrowers’ interest rates. Is this a good opportunity for borrowers in 2023? 

Today’s interest rates can be somewhat of a shock for first-time homebuyers. Temporary buydown programs can help ease first-time homebuyers into the process and let them know that if interest rates do drop, CCM can be there to help them save money down the road.