What will happen to mortgage rates in 2022?
Mortgage rate forecast for next week (Dec. 27-31)
Mortgage rates continue to fluctuate. However, as of December 23, they were back down to 3.05% on average.
The recent dip followed four weeks where mortgage rates were flat or rising.
This back–and–forth reflects outbreaks of the Omicron Covid–19 variant weighing down consumer sentiment paired with positive economic recovery.
Looking forward, rates seem likely to rise again unless further shutdowns are required to combat Omicron.
Will mortgage rates go down in January?
Mortgage rates decreased slightly at the end of December. But they should turn around in January and keep climbing throughout 2022.
Recent declines can be pinned on the Omicron variant. First, the ultra–contagious strain has caused renewed fear about traveling, dining out, in-person shopping, and other vital economic activities that were beginning to normalize before the variant hit. This caused a minor slowdown in economic growth and pushed mortgage rates slightly lower.
But consumers’ outlook on the economy is still optimistic overall. And the forces driving interest rates upward – including record-high inflation – are still present.
Perhaps most importantly, the Federal Reserve recently announced it would speed up tapering to combat those high inflation numbers.
The Fed expects to end its mortgage stimulus program by March or April of 2022. That could mean significantly higher mortgage rates in the first quarter of the year.
Remember that the Fed’s bond purchases throughout the pandemic kept mortgage rates artificially low. As the Fed pulls back (‘tapers’) those purchases, mortgage rates will almost certainly rise.
As of its last meeting, the Fed expects to end its mortgage stimulus program by March or April 2022. That could mean significantly higher mortgage rates in the first quarter of the year.
For now, though, interest rates are still at historic lows.
If you’ve put off refinancing a home or purchasing a new home, January 2022 could be the time to do it. But, unfortunately, the window to take advantage of today’s low–rate environment could close quickly.
Mortgage interest rates forecast next 90 days.
Consumer sentiment is still strong despite some minor economic slowdown due to the Omicron variant. Provided the economy continues to grow and shed its Covid worries, mortgage rates should rise slowly in the first quarter of 2021. Of course, there might always be short periods of stagnant or falling rates within the overall upward trend.
Mortgage rate predictions for 2022
Foremost housing authorities expect higher mortgage interest rates in the first quarter of 2022.
Fannie Mae offers the lowest prediction, putting 30–year fixed interest rates at 3.10% by the end of Q1. Wells Fargo and Freddie Mac are at the other end of the spectrum, predicting 30–year rates as high as 3.35% or 3.40% in early 2022.
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