California Mortgage Rates Drop in Early Part of 2023

According to the latest mortgage rate survey conducted by Freddie Mac, the average rate for a 30-year fixed mortgage loan continues to hover in the low-6% range. That’s quite an improvement from the fall of last year, when rates climbed above 7% for the first time in over a decade.

Economists are now predicting that this trend could give the California real estate market a boost in the spring of 2023. While no one can predict future mortgage rate trends with complete accuracy, it seems that rates are starting to level off a bit, after spiking during the latter part of 2022.

Mortgage Rates Drop in Early 2023

On February 9, 2023, the government-sponsored mortgage buyer Freddie Mac published the results of their latest weekly survey of mortgage rates. According to that survey, the average rate for the popular 30-year fixed home loan held steady at around 6.12%.

Mortgage rates in California and nationwide have declined in recent weeks, after hitting a 15-year high back in November. In mid November, 30-year mortgage rates climbed to a peak average of 7.08% — more than twice as high as they were at the beginning of last year. That trend reduced demand among home buyers and led to a cooling trend within the California real estate market.

The good news for home buyers is that rates have declined, more or less steadily, since hitting that November 2022 peak. As mentioned above, 30-year fixed mortgage rates averaged 6.12% over this past week (ending on February 9, 2023). Looking ahead, economists from Freddie Mac believe that this trend could give the real estate market a boost during the spring of 2023.

It’s important to reiterate that these are just averages. The rate you receive for a home loan can vary from national averages, due to a number of factors. Your credit score, the type of loan you choose, and the size of your down payment can all influence the interest rate you receive.

A California Housing Market Boost in Spring?

The real estate market in California typically becomes more active in early spring, following a seasonal (and predictable) downturn during the winter months. This year, the market could receive an additional boost from this downward trend in mortgage rates. Especially if they continue to fall.

According to the research team from Freddie Mac:

“Following an interest rate hike from the Federal Reserve and a surprisingly strong jobs report, mortgage rates increased slightly this week. The 30-year fixed-rate continues to hover close to six percent, and interested homebuyers are easing their way back to the market just in time for the spring homebuying season.”

They also pointed out that the drop in rates that occurred in early 2023 has increased affordability for many home buyers across the country. By their estimation, 3 million additional house shoppers nationwide could now qualify for a median-priced home.

Granted, home prices across California tend to run quite a bit higher than the national average. But even so, today’s lower mortgage rates could bring more home buyers back into the game by increasing affordability statewide. Time will tell.

Where Do We Go from Here?

Toward the end of 2022, we wrote about some mortgage rate forecasts offered by two major industry groups. One forecast came from the Mortgage Bankers Association, while the other was issued by economists from Freddie Mac. Both groups predicted that mortgage rates would trend downward throughout 2023.

Of course, there’s a big difference between a prediction and a sure bet. The truth is we don’t know with any certainty how mortgage rates will behave over the coming months. But a growing chorus of voices is suggesting they could decline further over the coming months.

All in all, the spring of 2023 could be a good time to buy a house in California. Sellers are more motivated these days, due to the aforementioned drop in demand. That means they are more willing to offer incentives, such as a contribution toward the buyer’s closing costs. Additionally, buyers have more negotiating leverage now than they’ve had for several years.

Want to Receive a Rate Quote?

Are you planning to buy a home in California sometime during 2023? Need a mortgage loan to help make that happen? If so, please contact our knowledgeable staff for assistance.

Bridgepoint Funding is located in the Bay Area and serves the entire state of California. We offer a broad range of financing options, for home buyers and homeowners alike.