Mortgage Interest Rate Predictions for 2022

After historically low mortgage interest rates made headlines in 2020 and 2021, you may wonder what experts predicted in 2022.

Keep reading to find out what you needed to know about interest rates in 2022.

Interest Rates in 2022 So Far

So far this year, interest rates have remained historically low, though we have seen an uptick recently. The two major factors contributing to rising rates are increasing inflation and a growing economy.

Expert Predictions

While there are no guarantees about interest rates in 2022, experts whose names you know are predicting that rates will go up multiple times this year.

Goldman Sachs recently said we should expect the Federal Reserve to raise rates four times this year after previously predicting there would be three rate hikes. The federal funds rate is currently set at about 0.08%, but it will likely increase by a full percentage point by the end of 2022.

While still historically low, you can expect mortgage interest rates in 2022 to return to pre-pandemic rates. This change is already taking place, as many mortgage rates have surged this week to the highest since early 2020.

When Will Rates Go Up?

The Federal Reserve has reaffirmed plans to end bond purchasing in March, with a likely interest rate hike. This means you have a tight timeline before the market begins to shift.

Federal Reserve Chair Jerome Powell said in a news conference that changes intend to “keep persistently high inflation from becoming entrenched” and that they have not made any firm decisions, keeping a “humble and nimble” perspective.

Factors That May Affect Predictions

Predictions for mortgage interest rates in 2022 are based on the expertise of industry professionals and our information, but these predictions are subject to change. If the last two years have taught us anything, unprecedented changes are always possible.

For example, interest rates were expected to rise in the final quarter of 2021, but this rate hike was slowed by the spread of the Omicron variant in December. As changes in the pandemic, bond purchasing by the Federal Reserve, the job market, and the overall economy occur, predictions for interest rates in 2022 will adapt.

What This Means for You

These changes and predictions should inform your real estate plans for this year. Here’s what the expected changes in mortgage interest rates in 2022 mean for you:

Timeline

Interest rates in 2022 are expected to increase incrementally at least three, and possibly more, times. This means the earlier 2022 you can purchase, the better.

Demand for homes in the Bay Area is expected to remain high, so your timeline for selling in 2022 does not need to be as dependent on rate changes as buying does.

Budget

Considering buying a home in 2022, consider how rising rates may affect your budget. If your monthly payment needs to stay under a certain price, you may be limited by increasing interest rates if you wait to purchase later in the year.