what is forecasted for mortgage rates in 2022.
Federal Reserve in Focus
The hottest topic on the minds of mortgage professionals as 2022 gets going is the stance and potential actions of the Federal Reserve. Estimates vary, but the general consensus is for the Fed to hike interest rates by September 2022.
The Mortgage Bankers Association sees the average 30-year fixed mortgage rate at 3.7% by the third quarter of 2022. Some analysts see higher rates. And as of the time of writing, we see the average 30-year fixed mortgage rate at 3.11% based on data from Freddie Mac–thus the consensus is for a rather steep rise later in 2022.
The recently announced Federal Reserve tapering of bond purchases and subsequent announcement to raise the benchmark overnight lending rate has begun to impact the marketplace. Here’s how tapering can affect mortgage rates.
Previously, a slower rise in rates was expected by the market at-large. Now, anticipations are for the Federal Reserve to raise its key overnight lending rate faster than previously expected.
Any increase to the Fed’s overnight lending rate (the rate banks charge each other for overnight funds) will increase rates of popular mortgage lending products like 15-year and 30-year mortgages.
Early and Mid 2022
While mortgage interest rates may rise later in the year, they could remain near current levels, with occasional downticks and upticks in early 2022.
It is hard to know with certainty, but some forecasts seem to have 30-year mortgage interest rates in the low to mid threes for excellent credit borrowers during the early to the middle part of the year, with 15-year mortgages ranging from the high twos to low threes.
Given the current outlook, now could be a great time to lock in a rate for a refinance, HELOC, or purchase. And there’s still time; 30-year fixed mortgage rates remain near 3.10 – 3.15% (at the time of this writing). A quick history reminder: Many borrowers held 30-year mortgages upwards of 15% in the early 1980s and, more recently, 30-y