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Where Are Mortgage Rates Headed?

By
Real Estate Broker/Owner with Arizona Resource Realty BR518926000

There’s never been a truer statement regarding forecasting mortgage rates than the one offered last year by Mark Fleming, Chief Economist at First American:

“You know, the fallacy of economic forecasting is: Don’t ever try and forecast interest rates and or, more specifically, if you’re a real estate economist mortgage rates, because you will always invariably be wrong.”

Coming into this year, most experts projected mortgage rates would gradually increase and end 2022 in the high three-percent range. It’s only April, and rates have already blown past those numbers. Freddie Mac announced last week that the 30-year fixed-rate mortgage is already at 4.72%.

Danielle Hale, Chief Economist at realtor.comtweeted on March 31:

“Continuing on the recent trajectory, would have mortgage rates hitting 5% within a matter of weeks. . . .”

Just five days later, on April 5, the Mortgage News Daily quoted a rate of 5.02%.

No one knows how swiftly mortgage rates will rise moving forward. However, at least to this point, they haven’t significantly impacted purchaser demand. Ali Wolf, Chief Economist at Zondaexplains:

Mortgage rates jumped much quicker and much higher than even the most aggressive forecasts called for at the end of last year, and yet housing demand appears to be holding steady.”

Through February, home prices, the number of showings, and the number of homes receiving multiple offers all saw a substantial increase. However, much of the spike in mortgage rates occurred in March. We will not know the true impact of the increase in mortgage rates until the March housing numbers become available in early May.

Rick Sharga, EVP of Market Intelligence at ATTOM Datarecently put rising rates into context:

“Historically low mortgage rates and higher wages helped offset rising home prices over the past few years, but as home prices continue to soar and interest rates approach five percent on a 30-year fixed rate loan, more consumers are going to struggle to find a property they can comfortably afford.”

While no one knows exactly where rates are headed, experts do think they’ll continue to rise in the months ahead. In the meantime, if you’re looking to buy a home, know that rising rates do have an impact. As rates rise, it’ll cost you more when you purchase a house. If you’re ready to buy, it may make sense to do so sooner rather than later.

Bottom Line

Mark Fleming got it right. Forecasting mortgage rates is an impossible task. However, it’s probably safe to assume the days of attaining a 3% mortgage rate are over. The question is whether that will soon be true for 4% rates as well.

Comments (5)

Bob "RealMan" Timm
Ward County Notary Services - Minot, ND
Owner of Ward Co Notary Services retired RE Broker

Kind of like weather forecasting isn't it Tamra Lee Ulmer ? Hope you are having an enjoyable Easter.

Apr 17, 2022 02:09 PM
Tamra Lee Ulmer

It is Bob, thanks for reading. Have a great week!

Apr 18, 2022 02:53 PM
Grant Schneider
Performance Development Strategies - Armonk, NY
Your Coach Helping You Create Successful Outcomes

This certainly increases the sense of urgency for buying now although the challenge of supply remains.

Apr 18, 2022 04:31 AM
Tamra Lee Ulmer

Hi, Grant! I agree. Thanks for reading! 

Apr 18, 2022 02:54 PM
Mark Don McInnes, Sandpoint-Idaho
Sandpoint Realty LLC - Sandpoint, ID
North Idaho Real Estate - 208-255.6227

Good morning Tamra.  'Blown Past' excellent description of the rates.  John Meussner recently posted an interesting blog on why the Feds may want to take a careful look at increasing rates too much more.  Pushing a line that history shows to lead to recession.  Always interesting times.  Mark

Apr 18, 2022 06:04 AM
Tamra Lee Ulmer

Thanks for taking the time to read this, have a great week Mark!

Apr 18, 2022 02:55 PM
Will Hamm
Hamm Homes - Aurora, CO
"Where There's a Will, There's a Way!"

Happy Monday Tamra and thank you for a great blog with this information to past on to us here in the Rain.  Make it a great day!

Apr 18, 2022 07:45 AM
Tamra Lee Ulmer

I'm glad you liked it. Have a great week ahead!

Apr 18, 2022 02:51 PM
John Meussner
Mortgages in AZ, CA, CO, DE, FL, GA, IN, MD, MN, MT, NC, NJ, NV, OK, OR, PA, SC, SD, TN, TX, UT, VA, WI - Fair Oaks, CA
#MortgageMadeEasy Fair Oaks, CA 484-680-4852

Will be interesting to see how the next 12-18 months play out with Fed action and the economic responses.  Hoping we've found the ceiling for rates.

Apr 18, 2022 09:55 AM
Tamra Lee Ulmer

Thank you very much.  I appreciate it.

Apr 18, 2022 02:50 PM