2022 Mortgage Interest Rate Predictions Update

2022 Mortgage Interest Rate Predictions – Mid Year Update

 

With 2022 almost halfway over, we wanted to share with you an update for 2022 mortgage interest rate predictions from experts around the country. We also give some insight and outline the facts about home buying in today’s market.

There’s a lot of noise out there right now in regards to inflation, the economy, interest rates, home prices, and the state of the market. Many buyers are now, more than ever, wondering, “Should I still buy a home? Or should I wait for lower rates and lower prices?” Below we will dive into the predictions for mortgage interest rates for 2022 and beyond, address the correlation between inflation and real estate appreciation and talk about what’s expected in the near future in the value of single family homes.

What do the experts say about 2022 mortgage interest predictions?

If you’ve been on the interest rate ride in 2022 and have been watching the rates closely, you might be getting a little sick to your stomach at this point from all of the movement! Rates have been changing wildly, especially over the last couple of months, with a general trend of ‘up’. As of today, rates are sitting right around 6%. According to the NAR and Realtor.com Chief Economists’ predictions, they see rates starting to level out at this point through the rest of the year. Predictions from Fannie Mae and the Mortgage Bankers Association also agree with this trend. While rates have been volatile as a result of the Fed’s rate hikes since these predictions were put into print, most experts see the current rates in the market as getting close to a plateau. Also note that predictions are for new construction housing starts to also take a dip. This decline will not give any help to the low inventory levels the market is currently experiencing. 

Is there a correlation between inflation and home values?

The short answer is technically, yes and no. Inflation has a direct effect on the cost of goods, value of the dollar, and things in that realm. Home values are driven by supply and demand. However, inflation does affect how much home a buyer can afford and thus can affect the demand. We are starting to see that play out in today’s market.

As you can see from the graphic above, home values beat out inflation more often than not. Why are home values so high and predicted to stay that way? That’s one of the key differences between today’s housing market and the market in 2008 before the big housing crash. At this time, we still don’t have enough inventory on the market to satisfy demand which helps keep home values high and steady. This is why so many experts still say that today is a great time to buy a home.

What’s in store for home values in the future?

One of the most commonly asked questions that we hear right now is “Are home prices going to go down?” In the current state of the market, home values are expected to continue their ascent in the coming years mainly due to the factors listed above with supply and demand. In addition to that, the rising costs of materials, material shortages and labor shortages continue to impact the cost to build a new home. These things have a specific effect on new construction homes. The chart above shows an example of the predictions. It lays out that while home values should continue to increase, they are expected to normalize by the end of next year.

The bottom line is that if you are waiting to build your home hoping that costs will come down, that’s unlikely to happen. While interest rates are high right now, they are normal in line with historical numbers. It’s important to stay focused on your budget rather than get caught up and stuck on an interest rate. If rates go up, you’ll be glad you bought when you did. If rates go down, refinancing is an option. Well known financial expert Dave Ramsey recently gave his take on why today is still a great time to buy a home, even in today’s market. Watch the video for more details!

Final Thoughts

It’s a complicated subject with a lot to think about. If you have been thinking about building a home on your lot and have questions before getting started, we are here to help. We have partnerships with experienced, trusted lender partners if you have questions on financing and our home consultants are ready assist you with anything else you might need to know about the process of building with us. Contact us today to get started! Also, check out our infographic, “The Cost of Waiting” to get more insight into why home buying is still a great choice for many people.