2021 represented a banner year for real estate, leaving many to inquire about 2022 mortgage rates. Last year, mortgage rates hovered around record low numbers. Real estate experts largely attributed this to the prevalence of the coronavirus pandemic, and its numerous variants.
Factors Driving Up 2022 Mortgage Rates
The United States real estate market faced a cold year in 2020. On the other hand, 2021 showed a return to form. In this sellers’ market, several factors spike 2022 mortgage rates, including home prices, existing sales, and the Federal Reserve tapering its bond purchase program.
Home Prices Rise
However, 2021 also marked a real estate surge. Even back in mid-December real estate giant Zillow predicted a massive rise in home prices. Compared to 2020, Zillow anticipated home prices to rise 19.5%.
Home Sales Spike
Along a similar vein, home sales also rose quite considerably. While December’s results won’t be in till later January, the National Association of Realtors Chief Economist, Lawrence Yun said, “Home sales remain resilient, despite low inventory and increasing affordability challenges.”
Federal Reserve Tapers Bond Purchase Program
But there remains an additional factor in play, the Federal Reserve’s tapering. Throughout the COVID-19 pandemic, the Federal Reserve purchased bonds to combat the country’s economic woes. From the midpoint onward, the United States saw record levels of inflation. In fact, inflation hit a 30-year high in October 2021, before doing so again immediately after in November.
Recently, the Federal Reserve announced a tapering of the bond purchase program. Effectively, this tapering scales back on the bonds purchased as an attempt to rebalance inflation. Now, analysts await the tapering to begin in the middle of this month. Meanwhile, the Federal Reserve plans to conclude the bond purchase program entirely on the earlier end of 2022.
Expectations for 2022 Mortgage Rates
With all of these factors in play, mortgage rates look to grow in 2022. Towards the end of December, mortgage rates rose by 0.04% reaching 3.28%. However, Lawrence Yun anticipates that mortgage rates increase to 3.5%.
Conclusively, Fannie Mae expects the benchmark 30-year fixed-rate to land between 3.1% and 3.2% throughout the first quarter of 2021. Having said that both the Mortgage Bankers Association and Freddie Mac set their sights on higher expectations. The Mortgage Bankers Association anticipates 3.3%-4%, whereas Freddie Mac plans for 3.4%-3.5%, overall.
Summary
Regardless of where 2022 mortgage rates settle in the first few months, one thing is clear: Analysts anticipate that they will rise.
For further information on 2022 mortgage rates, get in touch with one of the title and escrow specialists at Plymouth Title Guaranty Corporation.
Please note: The safety of our staff and clients is our highest priority. Effective immediately, Plymouth Title Guaranty Corp. will be taking the following precautions to limit the spread of the COVID-19 virus:
All purchase transactions need to take place at a Plymouth Title Guaranty Corp. closing office.
- If a party to the closing is not feeling well, please contact your closer before the closing so appropriate precautions can be taken.
- We ask visitors to utilize the restroom in our building upon arrival to thoroughly wash their hands before entering our office.
- Only individuals required to sign and/or deliver documents at closings will be allowed in our office. Specifically, closings will be limited to borrower(s), seller(s), agents, and lenders.
- All pens used in the closing will be given to the client after use.
- All closing rooms will be cleaned and disinfected in-between each closing.
- Those picking up checks at our office will be instructed to call our main line and request to speak to a staff member who will plan for delivery to the lobby or parking lot of our office.
- All staff will refrain from shaking hands before or after closings and ask clients to do the same.
Please be advised that our staffing may be impacted during this unprecedented event. While we are committed to continuing to provide outstanding service, we ask for your patience in the face of this pandemic.