Mortgage rates have reached their highest point in 13 years, according to Bankrate’s national survey of lenders. And many pros say that upward climb may not have hit its peak. Indeed, we asked five pros to tell us: What will happen to mortgage rates this year and what does that mean for home buyers? (See the lowest mortgage rates you can qualify for now here.)
Pros predictictions about mortgage rates
On May 16th, the Mortgage Bankers Association forecast that 30-year rates will close out 2022 at 5%, and in April, Freddie Mac forecast that the 30-year fixed-rate mortgage would average 4.6% for full-year 2022. “Mortgage rates will rise, but not abruptly,” concludes Holden Lewis, home and mortgage expert at Nerdwallet. And Steve Reich, chief operations officer at Finance of America Mortgage, predicts: “It’s possible we may see another increase soon — only time will tell.”
For some pros, 6% rates are a possibility. “Rates have already risen significantly since the start of the year, and they’re poised to climb even higher by the time 2023 comes around. While it isn’t guaranteed, rates of 6% or higher are possible,” says LendingTree’s senior economic analyst Jacob Channel. Adds Realtor.com senior economist George Ratiu: “If the pace of rate increases were to maintain the momentum … we can expect to see mortgage rates for a 30-year loan crossing 6%.”
But others say rates may plateau soon. “It’s even possible that rates could hit a ceiling over the next few weeks or months and then remain steady or even come back down from there. A Mortgage Bankers Association forecast from mid-April projected a 33% increase in purchase mortgage applications over the coming 3 months,” says Robert Heck, vice president of mortgage at Morty.
What does this mean for aspiring homebuyers?
“The rapid rise in mortgage rates is a punch to the gut for home shoppers who were already contending with record home value growth. Record low mortgage rates had been an affordability lifeline during the pandemic, keeping monthly payments in check even while prices rose to new highs,” says Nicole Bachaud, a Zillow economist.
For those considering a mortgage in the coming weeks and months, Heck says it may be a good idea to evaluate and track your qualified mortgage options with an eye towards locking in a loan option. But remember, don’t let this high-pressure housing market lead you into a house that might stretch you financially.