Karen Cannon

What does this mean if you’re thinking about making a move? Waiting until next year will cost you more in the long run. Here’s a look at what several experts project for mortgage rates going into 2022.

Freddie Mac:

“The average 30-year fixed-rate mortgage (FRM) is expected to be 3.0 percent in 2021 and 3.5 percent in 2022.”

Doug Duncan, Senior VP & Chief Economist, Fannie Mae:

“Right now, we forecast mortgage rates to average 3.3 percent in 2022, which, though slightly higher than 2020 and 2021, by historical standards remains extremely low and supportive of mortgage demand and affordability.” 

First American:

“Consensus forecasts predict that mortgage rates will hit 3.2 percent by the end of the year, and 3.7 percent by the end of 2022.”

If rates rise even a half-point percentage over the next year, it will impact what you pay each month over the life of your loan – and that can really add up. So, the reality is, as prices and mortgage rates rise, it will cost more to purchase a home.

As you can see from the quotes above, industry experts project rates will rise in the months ahead. Here’s a table that compares other expert views and gives an average of those projections: Whether you’re thinking about buying your first home, moving up to your dream home, or downsizing because your needs have changed, purchasing before mortgage rates rise even higher will help you take advantage of today’s homebuying affordability. That could be just the game-changer you need to achieve your homeownership goals.

Bottom Line

If you’re thinking of buying or selling over the next year, it may be wise to make your move sooner rather than later – before mortgage rates climb higher. Get started today by checking out our Dunwoody homes for sale, Sandy Springs home for sale, and Chamblee homes for sale!

“Mortgage rates rose across all loan types this week as the 10-year U.S. Treasury yield reached its highest point since June.”

The reason Khater mentions the 10-year U.S. Treasury yield is because there has been a very strong relationship between the yield and the 30-year mortgage rate over the last five decades. Here’s a graph showing that relationship:

The relationship has also been consistent throughout 2021 as evidenced by this graph:

The graph also reveals the most recent jump in mortgage rates was preceded by a jump in the 10-year Treasury rate (called out by the red circles).

So, What Impacts the Yield Rate?

According to Investopedia:

“There are a number of economic factors that impact Treasury yields, such as interest rates, inflation, and economic growth.”

Since there are currently concerns about inflation and economic growth due to the pandemic, the Treasury yield spiked last week. That spike impacted mortgage rates.

What Does This Mean for You?

Khater, in the Freddie Mac release mentioned above, says:

“We expect mortgage rates to continue to rise modestly which will likely have an impact on home prices, causing them to moderate slightly after increasing over the last year.”

Nadia Evangelou, Senior Economist and Director of Forecasting for the National Association of Realtors (NAR), also addresses the issue:

“Consumers shouldn’t panic. Keep in mind that even though rates will increase in the following months, these rates will still be historically low. The National Association of REALTORS forecasts the 30-year fixed mortgage rate to reach 3.5% by mid-2022.”

Bottom Line

Forecasting mortgage rates is very difficult. As Mark Fleming, Chief Economist at First American once quipped:

“You know, the fallacy of economic forecasting is don’t ever try and forecast interest rates and or, more specifically, if you’re a real estate economist mortgage rates, because you will always invariably be wrong.”

That being said, if you’re either a first-time homebuyer or a current homeowner thinking of moving into a home that better fits your current needs, keep abreast of what’s happening with mortgage rates. It may very well impact your decision.