2022 Mortgage Predictions

What Will Happen in the Mortgage Industry in 2022?

2021 was a record-breaking year for the mortgage industry. In the past year, we saw the 30-year fixed-mortgage rate hit a record-low of 2.65%, inflation rates hit a 39-year high, and mortgage lenders dished out a record-high of $1.61 trillion in loans.

Despite seeing so many record lows last year, it isn’t expected that mortgage rates will continue to drop in 2022. As of 1/12/2022, the interest rate on a 30-year fixed-rate mortgage is 3.4%, though many experts don’t expect that figure to rise dramatically.

2021 Mortgage Rates

2021 boasted record-breaking low interest rates, with little variability across the months. To see how mortgage rates fluctuated throughout the year, here’s a look back at rates in 2021.

Let’s put these numbers to work. With today’s interest rate of 3.4%, buying a $500,000 home with a 10% down payment would put the monthly payment around $1,995 (not including taxes, PMI, insurance, or HOA fees). So, what should potential buyers expect in terms of 2022’s mortgage rates and monthly payments?

2022 Mortgage Rate Predictions

Before delving into the numbers, it’s important to note that the mortgage market is influenced by several factors, including inflation, the housing market, the bond market, and the Federal Reserve’s policies. Despite the fact that the inflation rate for 2022 is expected to drop to 2.3% (down from a high of 6.8% in 2021), we anticipate that the average mortgage rate will increase this year — and experts are inclined to agree.

The Mortgage Reports interviewed eight mortgage, housing, and finance professionals to hear their predictions for 2022’s mortgage rates. While the industry powerhouses do expect mortgage rates to increase, they don’t anticipate the yearly average to sit much higher than the historic low rates we’ve seen in the past year. Here’s a graph representing their predictions:

If we look at the higher end of the expert predictions, buying a $500,000 home with a 10% down payment and an interest rate of 4.1%, the monthly payment would be around $2,174 (not including taxes, PMI, insurance, or HOA fees) — only $179 higher than the monthly payment example above. These payments will vary depending on how much money is put down and your client’s lender.

If there was to be bad news, it’s that we probably won’t see mortgage rates hit lows as we saw in 2021. The good news is that you shouldn’t expect mortgage rates to increase dramatically, making for continued low rates. Although home prices are high, low mortgage rates will continue to keep the housing market moving at a fast pace in 2022. If your clients are looking to buy or refinance, now is the time for them to save money based on mortgage rates!