There’s optimism among mortgage industry watchers that mortgage rates will return to 5% this year – but there’ll also be some volatility.

Bob Broeksmit, Mortgage Bankers Association (MBA) president and CEO, said that in the coming months of the year, the trade group anticipates mortgage rates to lower, which should help increase home sales. At the end of 2023, MBA predicts the 30-year rate will be 5.2%.

The Federal Reserve’s restrictive monetary policy is finally cooling down the economic climate reason for the optimistic outlook for the rest of the year.

Bureau of Labor and Statistics (BLS) data shows that wage and job growth are slowing even though the labor market completed the previous year stronger than expected.

According to the Consumer Price Index, prices increased by 6.5% last month over a year ago, marking the smallest 12-month increase since October 2021. As a result, inflation slowed for the sixth consecutive month in December.

According to Freddie Mac, the 30-year fixed-rate mortgage decreased to 6.33% this week, down 15 basis points from one week ago. At this time last year, the rate was 3.45%.

Thursday morning, Mortgage News Daily reported a six basis point decline in rates to 6.15%.

For the first time in 14 years, mortgage rates crossed the 6% mark in September, moving up and down in the 6% to 7% range.

In the short term, they will remain in the same range, according to Realtor.com’s manager of economic research, George Ratiu.

In his commentary to clients, Tad Dahlke, CEO of the California-based mortgage trading company RAMS, noted that the average rate for mortgages has been 7.38% during the last forty years, 4.53% during the last twenty years, and 3.36% during the past three.

Currently, the spread between mortgage rates for borrowers and those of mortgage-backed securities has reached 200 basis points. In the past ten years, it has averaged 75 to 80 basis points.

On Wednesday, the yield on 10-year Treasury notes fell to 3.54% from 3.79% a week ago.