Mortgage Rate Predictions for 2022
After interest rates on 30-year fixed-rate mortgages hit a record low of 2.66% at the tail end of 2020, the rates rose modestly at the start of 2021 hovering below 3% for much of the year. While 2022 kicked off with low mortgage rates, they have seen an uptick recently. There are two major factors at play here: increasing inflation and a growing economy. That said, mortgage rates can always rise and fall for a variety of reasons. At a basic level, a growing economy leads to higher mortgage rates while a slowing economy leads to lower mortgage rates.
Overall, mortgage rates are expected to go up in 2022, particularly with the Federal Reserve's indication of an increase to the bench mark interest rates and Federal Reserve's plan to slowly ease off its support of the market by tapering its purchases of mortgage-backed and Treasury securities. Even though the Fed doesn’t directly control mortgage rates, the central bank's long-anticipated move already had market watchers looking ahead to higher rates throughout the second half of 2021. For now, mortgage rates are rising more gradually as markets wait for the Federal Reserve to clarify their timetable. Until the magnitude and speed of the Federal Reserve’s adjustments are clear, the current trend in mortgage rates is likely to keep borrowing attainable for potential buyers.
Although mortgage rates have increased, the housing market isn’t the same as it was in 2019. Housing prices have gone up significantly in the past couple of years, and experts warn the rising mortgage rates won’t necessarily bring those prices down. House prices in 2021 were up 18.8% over the prior year, according to the latest figures from the S&P CoreLogic Case-Shiller Index.
High housing prices aren’t necessarily a direct result of mortgage rates but are more often driven by an imbalance of supply and demand. There are more buyers in the market and they’re competing for fewer houses. In part, more millennials and younger folks are trying to buy houses, while more retirees are choosing to stay in their homes instead of selling. In addition to this imbalance, people taking advantage of flexible working situations has led buyers to look at desirable geographical locations, such as Summit County. If you take a longer perspective than just the past two years, mortgage rates are still historically low. This said, homebuyers might be drawn into the market now before rates rise further.
Preparing to Sell During the Spring 2022 Homebuying Season
The good news for sellers is that buyers looking for homes are expected to outnumber the homes for sale. Overall, home prices are expected to continue to increase. Low inventory in the area will continue to ensure sellers get top dollar for their homes. It’s a good idea to work with a local real estate professional to determine an ideal listing price and if any improvements or repairs need to be completed before putting your home on the market. If you plan on making any major changes or upgrades before listing your home, you’ll want to get that process started as soon as possible. Most trade professionals such as carpenters, plumbers and electricians may have a long backlog of work.
When considering the best time to put your home up for sale, you’ll want to list when the demand for buyers is at the highest. In many markets, that timeframe is from the end of March to June, when families are considering relocating after the school year.
More than ever, buyers and sellers will need a real estate professional with deep roots in the community and expert market knowledge, like the brokers at Breckenridge Associates. We have an entire team waiting to answer your questions and earn your trust. Please stop by our Main Street office, call us at 970.453.2200 or email your Breckenridge Associates broker today.
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