Fitch Ratings reveals how much US house prices will drop in 2023

Fitch stated that mortgage performance is expected to deteriorate in most countries, due to inflation and high interest rates increasing borrower payments and eroding income, which in turn will weaken borrower credit quality and drive arrears.

Like other countries, the US is expected to fall into a mild recession, although this is expected to happen during the second quarter of 2023 and not earlier, as in the eurozone.

Significantly, materially higher mortgage costs, resulting in the average payment soaring by more than 50% since 2021, will price out first-time buyers and those looking to upgrade their property.

Fitch noted that property investors “have begun to step back and will remain on the sidelines into 2023”.

Due to a split US Congress, it is also unlikely that there will be any meaningful government support to make homes more affordable, meaning that private lenders will be required to step in, the report suggested.