- Will Mortgage Rates Continue To Rise
- Housing Demand Outweighs Supply As Home Prices Continue To Rise
- U.s. Mortgage Rates Rise To 6.81%, Highest Level This Year, Freddie Mac Says
Will Mortgage Rates Continue To Rise – While the U.S. economy is continuing to recover from its Covid slump, and while inflation is putting upward pressure on interest rates, most experts agree that mortgage rates will rise higher in 2022.
How tall are they? The sources of the industry are divided there. But they mostly agree on 30-year rates in the high-3% to low-4% range by the end of next year.
Will Mortgage Rates Continue To Rise
That means it’s in your best interest to buy or refinance early in 2022 if you’re keeping an eye on today’s low rates to help you save.
U.s. 30 Year Mortgage Rates Rise, Inching Closer To 8%
By the end of next year, industry experts predict that the 30-year fixed mortgage rate could rise to between 3.4% and 4.1%. When it comes to 15-year mortgage rates, they predict an average between 3.0% and 3.5%.
Average interest rate forecasts put 30-year fixed rates at 3.88% and 15-year fixed rates at 3.27% in 2022.
In perspective, it’s important to note that mortgage interest rates have remained relatively affordable. And for the foreseeable future, they should not stray
Consider that, 40 years ago, mortgage interest rates were close to 17%. With that in mind, an increase to even 4% by the end of 2022 doesn’t look too scary.
Late 2022 Housing Forecast Infographic
Industry experts generally agree that mortgage rates will rise in 2022. But they are divided on how much higher the rates will be. Here are 30- and 15-year mortgage rate forecasts from eight professionals we interviewed, along with the reasoning behind their predictions.
Selma Hepp, deputy chief economist for CoreLogic, said it’s easy to see factors that could drive mortgage rates higher in 2022.
“Inflation, government intervention in the housing market, the supply of homes for sale, and consumer debt will all play a part,” he said. “Further gradual increases in mortgage rates will be driven by expanding inflation and inflationary expectations as well as continued shortages in the supply of labor, materials, and energy.”
With a little less demand and a little more supply next year, Hepp expects homes for sale to stay on the market a little longer with fewer competing bidders, which should moderate home price growth. .
Housing Demand Outweighs Supply As Home Prices Continue To Rise
“CoreLogic’s Home Price Index Forecast has the annual average increase in our national price index slowing from about 15% in 2021 to 5% in 2022,” he said.
“I think we’re probably going to see mortgage rates go up in 2022,” said Rick Sharga, executive vice president at RealtyTrac.
He explained, “The biggest question is whether today’s high inflation is short-lived, as the Biden Administration claims, or will be more widespread. Higher inflation almost always results in higher mortgage interest rates. If the The Federal Reserve Bank decides that it needs to do something stronger to slow the rate of inflation, it will likely raise the Fed Funds rate, creating a higher rate environment in general.
“If the Federal Reserve Bank decides it needs to do something stronger to slow the rate of inflation, it will likely raise the Fed Funds rate, creating a higher rate environment overall.”
Mortgage Interest Rates Trending Upward
Consider that the spread between yields on 10-year Treasuries and 30-year fixed-rate mortgages is below its historic level of about 2 points, so mortgage rates could rise by some basis if the relationship will just go back to normal. levels next year, he added.
“Several factors could drive mortgage rates lower in 2022. First, yields on many investment products are still historically low. Central banks in several countries have deployed negative interest rates in 2021. Second, many international economies are still quite volatile, and often drive investments towards US Treasuries on a flight. toward safety, which lowers yields, which can have a similar effect on mortgage rates,” Sharga said.
Al Lord, founder of Lexard Capital Management, said two discussed factors will influence the direction of mortgage rates in 2022.
“The first is the Fed’s tapering of the asset repurchase program. Reducing asset repurchases creates less money supply in the market and increases interest and mortgage rates,” he said.
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“Second is the lack of homes for sale and limited new construction activity. High home prices and the limited supply of homes, from resale or new construction, will keep demand for mortgages low. compared to 2021. As a result, mortgage rates will likely stay close to the same or drop slightly, I believe. The result of these two factors will lead to higher mortgage rates in mid-2022, if not earlier.”
“That’s why my advice to homeowners is to buy a property sooner rather than later and lock in moderate mortgage rates,” added Lord.
Bruce Ailion, a Realtor and real estate attorney, isn’t too optimistic that 2022 rates will stay as low as they are this year.
“When inflation first appeared, it was expected that it would be transitory. Now, it is considered ripe for the future,” he cautioned. “The 2022 inflation rate is expected to settle at 4.5%, hopefully falling to 3.5% in 2023. The expected higher interest rates will put pressure on the Fed to slow the economy by raising interest rates.”
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He reminded readers that the Fed has signaled its intention to raise rates by slowing its purchases of government bonds, which will cause rates to generally rise next year.
“But rates could be lower than expected next year if we see a consumer backlash and unwillingness to pay higher prices. The labor pool that has been sitting on the sidelines of this recovery could re-enter in the workforce, as well, slowing wage inflation. These and other actions are unlikely to happen, however, “he explained.
Embrace Home Loans’ Stephen Adamo also believes rates are likely to rise in 2022, especially with the Fed already beginning to taper its monthly bond purchases.
“That said, a macroeconomic problem could slow the rise in rates and possibly lead to slightly lower rates. The data around the pandemic has improved, even though the country is now seeing an increase in cases of COVID. If the pandemic creates more challenges next year, we may see rates drop from where they are now,” Adamo said.
U.s. Mortgage Rates Rise To 6.81%, Highest Level This Year, Freddie Mac Says
It is more likely that, late next year, we will see a modest rate hike of at least 50 basis points higher than today, he said.
The good news? Borrowing costs are about as attractive as they come, according to Than Merrill of FortuneBuilders. The bad news? “Inflation caused by government stimuli in the wake of a global pandemic has forced the Fed’s hand to raise borrowing costs,” he said.
For these and other reasons, he predicts that rates are more likely to head north than south by this time next year.
“If inflation proves to be transient, it is safe to assume that interest rates will rise faster than they did in 2021. However, it should be noted that the Fed cannot raise interest rates faster than to what the economy can strengthen. So while interest rates are expected to rise, they probably won’t rise significantly,” Merrill explained.
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For Lyle Solomon, attorney at Oak View Law Group, the equation is simple: “When consumers can spend more, which is true now, they can afford to buy houses. This increases the demand for mortgages, that will likely happen in 2022,” he said.
Expected stronger economic growth, which could lead to higher treasury yields, is the biggest reason why Solomon expects a 4% average rate for a 30-year mortgage next year.
Andreis Bergeron of Awning.com sees 30-year interest rates moving slightly above 4% in 2022. In addition to Federal Reserve policy, the Fed Funds rate, and inflation, Bergeron points the finger in the bond market, gross domestic product, and housing trends among the elements that will affect mortgage interest rates in 2022.
“Rates are expected to rise in the coming years driven by the largest year-over-year inflation growth in 30 years and the fact that the Fed Funds are expected to raise rates,” he said.
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Considering that inflation growth is typically double where current mortgage rates sit, lenders will be forced to raise rates to make a profit margin on their products next year, he continued.
Are you on the fence about buying a property? Remember that low mortgage rates are helpful, but they shouldn’t be your deciding factor. Think carefully before committing to a mortgage loan and lock in a rate until you are financially ready.
“Don’t make a bad decision and rush into buying a house strictly to take advantage of an interest rate that is, say, 0.5% better than recently,” recommends Sharga.
“However,” he added, “it’s important to note that home prices are likely to continue to rise in 2022, so waiting to see if prices drop with interest rates could leave you with a higher house price and higher. -loan price.”
Today’s Mortgage Rates, Feb. 17, 2023: Rates Continue To Rise
“Prospective buyers should strongly consider buying at today’s prices and rates as they are only expected to rise for the foreseeable future.”
“The current market environment indicates borrowing costs and home values will increase. Prospective buyers should strongly consider buying at today’s prices and rates because they are only expected to go higher. for the foreseeable future,” he said.
Say you buy $300,