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7 like China reduce pandemic-related re- strictions. is doesn't mean supply chains will return to how they were before the pandemic, but it suggests that transporting raw materials and goods will be less of a challenge in many instances. • Interest rate growth should moderate. e Fed will likely continue to hike rates over the coming months. But if inflation starts to wane, we could see an end to the aggressive rate-hike policies implemented through much of 2022. While this doesn't necessar- ily mean rates will come down—barring a major recession, the Fed is unlikely to start reducing rates even if they stop hiking them—it will nonetheless be good news for those struggling to keep up with rising rates. Of course, rates could come down on some products not directly tied to the federal funds rate, like mortgages. Potential Economic Downsides in 2023 • A recession could be on the horizon. Owing to various factors from a softening labor market to the Fed's aggressive rate strategy, a recession hitting sometime in 2023 or early 2024 is a real possibility. However, a recession isn't the end of the world. If one does hit, it'll likely be mild. • e housing market will remain prohib- itively expensive for many. Even though home prices seem like they're going to come down in 2023, or—at the very least—stop rising, that doesn't mean hous- ing will become affordable for everyone. Especially for lower-income borrowers, the housing market will likely remain a tough nut to crack for quite some time. • Home sellers could face challenges. In 2020, 2021, and even earlier parts of 2022, sellers enjoyed a significant amount of leeway in the market. is trend already started to reverse in the latter half of 2022 and will likely continue into 2023. While this could be seen as good news for some buyers, it'll likely be less than ideal for sellers who may find their homes are tak- ing longer to sell and need to make more concessions to buyers than they'd prefer. • e labor market will soften. ough unemployment remains low, there are signs the labor market is softening. As the year continues, though, it's likely that more people will be laid off and the unemploy- ment rate will increase. Journal CHECKING IN WITH MORTGAGE PERFORMANCE Black Knight's "first look" at November 2022 mortgage performance statistics revealed that prepayment activity dropped 15.6% to a rate of 0.4%, the lowest rate recorded in the history of the report. Overall, the national delinquency rate rose 3.5% from October 2022 to a rate of 3.01%, mainly driven by a 31,000-file increase (or 3.9%) in 30-day delinquencies and a 25,000- file rise in 60-day delinquencies. Looking specifically at Florida, the delin- quency rate rose another 18 basis points in the month to 3.60% as the impact of Hurricane Ian on homeowners' ability to make mortgage payments continues. Foreclosure proceedings began on 4.3% of serious delinquencies, up from October, but 44% less than the rate seen in the years leading up to the COVID-19 pandemic. Active foreclosure inventory rose 5.3%, though 2022 volumes remain subdued after the record lows of 2021 due to widespread moratoriums and forbearance protections. By the numbers: Total U.S. loan delinquency rate (loans 30 or more days past due, but not in foreclosure): 3.01% • Month-over-month change: 3.46% • Year-over-year change: -16.18% Total U.S. foreclosure pre-sale inventory rate: 0.37% • Month-over-month change: 5.29% • Year-over-year change: 46.60% Total U.S. foreclosure starts: 23,400 • Month-over-month change: 19.39% • Year-over-year change: 532.43% Monthly prepayment rate (SMM): 0.40% • Month-over-month change: -15.57% • Year-over-year change: -77.26% Foreclosure sales as % of 90+: 0.55% • Month-over-month change: -6.73% • Year-over-year change: 109.66% Number of properties that are 30 or more days past due, but not in foreclosure: 1,612,000 • Month-over-month change: 55,000 Year-over-year change: -294,000 Number of properties that are 90 or more days past due, but not in foreclosure: 550,000 • Month-over-month change: -1,000 • Year-over-year change: -476,000 Number of properties in foreclosure pre- sale inventory: 196,000 • Month-over-month change: 10,000 • Year-over-year change: 64,000 Number of properties that are 30 or more days past due or in foreclosure: 1,808,000 • Month-over-month change: 65,000 • Year-over-year change: -231,000 Top five states by noncurrent percentage: • Mississippi: 6.70% • Louisiana: 6.08% • Oklahoma: 5.03 % • Alabama: 4.76 % • West Virginia: 4.66 % Bottom five states by noncurrent percent- age: • Oregon: 2.06 % • Colorado: 1.98 % • California: 1.90 % • Idaho: 1.79 % • Washington: 1.69 % Top five states by 90+ days delinquent percentage: • Mississippi: 2.32% • Louisiana: 1.90% • Alabama: 1.62% • Arkansas: 1.53% • Oklahoma: 1.50% Top five states by six-month change in noncurrent percentage: • Alaska: -20.97% • Hawaii: -8.34% • New York: -6.90% • New Hampshire: 1.28% • Maine: 3.04% Bottom five States by six-month change in noncurrent percentage: • Florida: 24.63% • Arizona: 21.03% • Wyoming: 16.96% • Iowa: 15.97% • South Dakota: 15.58%