What 5 Economists and Real Estate Professionals Say Will Happen to Mortgage Rates in 2022

30-year mortgage rates are likely to rise during 2022 – the hard numbers will rise, however, we guess. But the experts have their guesses.

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Many pros predict mortgage rates will continue to rise in 2022, but expect ups and downs along the way. We’ve looked at the latest mortgage rate forecasts from major real estate players – and asked five experts – to review what could happen to mortgage rates this year.

Mortgage rates could end up at 4.5%, some pros say

Based on recent forecasts from Fannie Mae, the National Association of Realtors, the Mortgage Brokers Association and others, 30-year mortgage rates are likely to rise during 2022 – the exact numbered rates will rise, however, throughout everyone guesses it. But the experts have their guesses.

“The Federal Reserve could continue to push long-term rates higher by reducing its large holdings of mortgage bonds. Mortgage rates will be up and down in 2022 and I wouldn’t be surprised if they end the year down. 4.5% or more,” says Holden Lewis, real estate and mortgage expert at NerdWallet. Greg McBride, chief financial analyst for Bankrate.com, says he could see – if inflation continues to pick up and the Fed remains behind the inflation curve – rates also hitting 4.5%.That said, “if the Fed is aggressive in raising short-term rates to contain inflation, that would be good for mortgage rates” , McBride said.

“Now the question is whether the Fed can get inflation under control and how many rate hikes we might see, with some analysts saying the Fed could ask for five to seven rate hikes this year,” Dallas said. President of Finance of America Mortgage. .

Others have lower forecasts: Fannie Mae recently noted that the 30-year fixed mortgage rate should “now end the year at 3.7%”. Lawrence Yun, chief economist at the National Association of Realtors, told MarketWatch Picks that higher mortgage rates were expected, and in January NAR was also forecasting rates as high as 3.7%.

Understand the role of the Federal Reserve in this

“The Federal Reserve, the world’s largest single investor in mortgage-backed securities (MBS), is scaling back its purchases of MBS and plans to halt completely by early March. Subsequently, but without providing any supporting details, the Fed has indicated that it will not reinvest the proceeds of maturing MBS into new MBS,” Fannie Mae chief economist Doug Duncan said. reinvestment of these funds towards the purchase of Treasury securities.”

This means that private investors will likely have to play the role of the Federal Reserve as buyers of MBS, which would require an increase in the yield of MBS to induce them to do so, says Duncan. “Ultimately, this additional cost would be passed on to borrowers via the mortgage rate,” says Duncan.

For their part, “investors expect aggressive actions from the Fed to rein in inflation, pushing rates higher,” said Paul Thomas, Zillows vice president of capital markets for mortgages. Additionally, markets will focus on Fed updates in the coming weeks as well as any developments with the invasion of Ukraine, which could lead to additional rate swings, Thomas said. The next Fed meeting is scheduled for March 15-16.

What does this all mean for homebuyers?

Don’t panic about potential rate hikes, say the pros, although it’s true that it’s best to get the lowest rate possible. “Compared to the 1980s, when interest rates were in the double digits, a 4% interest rate keeps credit relatively cheap,” says Dallas. The combination of rising interest rates and rising house prices will push some potential buyers out of the market, which could lead to less competition after the summer buying season ends, said Lewis. So if you want to avoid a multiple-bid situation that leads to overselling, you might want to wait to buy a house. Then again, if you find a home you love now, there’s no better time than the present.