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Where Are Mortgage Rates Heading in 2022?

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On March 16, the Federal Reserve announced the first in a series of anticipated interest rate increases for 2022 so buyers will see interest rates rise this year. According to a March 21, 2022, Wallstreet Journal article, “Federal Reserve Chairman Jerome Powell said the central bank is prepared to raise interest rates in half-percentage-point steps and high enough to deliberately slow the economy if it concludes such steps are warranted to bring inflation down.” Officials are anticipating the rate to lift to nearly 2% by the end of the year and 2.75% by the end of 2023.

In a presentation to the New Hampshire Association of Realtors, Lawrence Yun, Chief Economist for the National Association of Realtors, addressed the rising interest rates. Dr. Yun predicted around 5 or 6 rate increases will take place over the course of 2022, but also noted that banks have been gradually raising rates in anticipation of the Feds movement and that any further increase by the Fed will result in a more minimal increase in mortgage rates. In the chart below Dr. Yun shows a historical comparison of average 30-year fixed rate mortgage (blue line) and the Federal Reserve Control (red line).

 

 
Slide from Lawrence Yun presentation, March 15, 2022. View presentation here.


For a local take on where mortgage rates are headed, we turn to Senior Vice President Mortgage Lender for Mascoma Bank, Cathy Murray.

What are rates for a 30-year fixed rate mortgage?  
Interest rates have been on the rise recently, April rates rate increased to 5.000%, depending on the day, fluctuations for the month 5.125%/5.250%.

What about jumbo loan rates? 
Depending upon the mortgage program a borrower chooses, we have rates as low as 4.375% and our 10-year jumbo is 3.500%. 

Where do you see rates rising this summer? 
Although mortgage rates started ticking-up in the second half of 2021, and will likely continue to increase throughout 2022, rates remain historically low. The Federal Reserve has been working to get inflation under control, and plans to increase the federal funds target rate six more times this year, following a 0.25% increase at its March, 2022 meeting. 

What do today’s buyers need to know about mortgage rates?
Interest rates are on the rise, however they still remain historically low. Stay updated with the lender you have become pre-approved with throughout your house shopping journey.  As rates rise, be sure an increase to interest rates does not impact your buying price range. 

What are some of your favorite loan products for buyers with less than 20% down? 
At Mascoma Bank we have several options for buyers with less than 20% down payment. One of my favorite programs is our 100% financing option with no MI! (MI=mortgage insurance) This program offers an 80% first mortgage and up to 20% second mortgage without mortgage insurance or prepayment penalty. We also have a fantastic First Time Homebuyer program that provides $4,000 closing cost credit and as little as 3% down payment! These are just two of my favorites, many other options depending upon the buyer’s needs. 

Any changes in loan products for investment properties? 
Investment property purchases require the strongest borrowers with 20 to 30% down payment depending upon the number of units. Good credit as well as asset reserves also remain a requirement for investor purchases. 

What advice would you give to a buyer in today’s market?  
Find a reputable local realtor. They are your best bet for housing opportunities and an accepted offer. Find a local seasoned lender and get pre-approved (ask your realtor for suggestions)! With inventory so low, buyers need to be prepared with their strongest, best offer quickly.  

If you want to explore lending options or learn more about the current mortgage rate landscape, contact Cathy Murray at cathy.murray@mascomabank.com.

 

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