In December, we discussed some big predictions for 2022 that included mortgage rates rising to 3.6 percent by the end of the year. We saw a gradual increase throughout 2021 which led many to believe the pattern would continue as we monitored the effects of COVID-19 on employment and the real estate market. However, like we’ve all been saying over the past two years, these are unprecedented times and we often find predictions exceeding expectations.

For example, the week of January 13, we saw an increase in mortgage rates to 3.45 percent, which was up significantly from the prior week’s 3.22 percent as shown by Freddie Mac. Interestingly, the 30-year fixed mortgage rate fell to 3.05 percent in December due to fear surrounding Omnicron, then proceeded to rise for the following three weeks. With this fast-paced rise comes fresh predictions for year-end rates.

What Do the Experts Say About Interest Rates?

Bankrate’s chief financial analyst, Greg McBride, says he expects rates to “climb to 3.75 percent during 2022 before falling back to 3.5 percent by the end of the year”. Meanwhile, chief economist Michael Fratantoni of the Mortgage Bankers Association says he believes rates will reach 4 percent by year’s end. At the National Association of Realtors, chief economist Lawren Yun says rates will hover around 3.7 percent.

McBride cited inflation as the reason behind the surge stating, “Inflation is a major economic issue and the Fed was late to get that memo, so recalibrating Fed expectations has been a catalyst for volatility.” Additionally, the Federal Reserve is using increased mortgage rates as a way to slow down inflation caused by COVID-19 and the recent Omnicron variant. Currently, the inflation rate is sitting at 7 percent, the highest since 1982.

What does this mean for refinance rates? The obvious conclusion is we’ll see refinance applications dropping, though current rates are still appealing, in response to the increase. Because of this, mortgage professionals should be adjusting their strategies to suit the market’s evolving needs.

It’s important to keep in mind, as with all real estate predictions, that nothing is certain, and this holds especially true in today’s lending environment. We may just see our expectations surpassed again. One way to keep up to date on current trends is with highly reliable data from The Warren Group. Our Mortgage MarketShare and Loan Originator Modules have gone national and are the key to staying a step ahead of the competition in a tight market with constantly evolving dynamics. Access mortgage and loan origination data in your target market to track lending, measure sales performance against the competition, find productive loan officers, and a lot more. If you’re ready to learn how data by The Warren Group works for you, reach out to a data specialist today.