Will Mortgage Rates Stay Low in 2022?

It’s been all over the news: mortgage rates are on the rise. In an effort to combat rising inflation, the federal reserve has revised interest rates numerous times since the beginning of the year. As it stands as of writing, interest rates are a full 2 percentage points higher than they were at the start of 2022. However, what might be lost in the conversation about rising rates is that, comparatively, rates are actually still at historic lows. So, will that trend continue as we move through the last half of 2022?

Rising Rates?

The interest rate on a 30-year fixed rate mortgage, the main benchmark for mortgage rates, was at 5.58% as of August 12th, about half a percentage down from the 14-year peak rate reached in mid-June. Meanwhile, according to the same data, a 15-year mortgage rate reached 5% after also hitting a 14-year high of 5.41% in mid-June. So, if the data holds up, we could be looking at mortgage rates that hover and fluctuate within 1-2% of their current rates. However, potential homebuyers should pay attention since even a 1% increase could cut a spending budget by up to 10%.

Where Do We Go From Here?

With uncertainty about whether the U.S. economy is heading towards a recession, future fluctuations in mortgage rates are still possible. However, long-term rates seem to be settling into their current rates of around 5% after a week of fairly static movement, while shorter-term rates have been more volatile. Even with these data points, many experts predict that upward pressure on rates will see them raise to 6% or even 7% by the end of the year.

Navigating the Current Market

Despite promising week-to-week trends, we still expect to see mortgage rates hit their highest points since 2008 by the end of 2022. Mortgage rates, and further interest rate hikes, are contingent on reigning in inflation, which is not likely to happen in the short term. In fact, we are expecting to see gradual rate increases continue through the end of the year (Read more in our online magazine). However, while prices are not expected to plummet by any means, we may see some price decreases in the fall, which should be welcome news to buyers who have faced competitive bidding wars and seen inflation and rate hikes cut their home purchasing power over the last year.

In that sense, with so much uncertainty in the market, now more than ever, it is important to work with experienced real estate professionals. At The Chang Group, our unparalleled expertise can help you navigate the complicated markets today, and in the future, whatever your real estate goals may be. Do not hesitate to reach out to our team with any questions!