chart showing mortgage interest rates rising

At MarketNsight’s December 9, 2021 MarketWatch, David Godwin, Senior Vice President of Business Development for Bank South Mortgage was asked, “What is going to happen to interest rates in 2022?”  His response was, Fannie Mae, Freddie Mac, the National Association of Realtors and the Georgia Bankers Association are all showing a slight uptick in mortgage rates for 2022. Godwin makes the following predictions.  Rates will be below 3.5% for the first quarter, at 3.5% mid year, at up to 3.75% late next year. He comments, “Even at 3.75%, we will enjoy a very healthy market next year with the demand we have.”

According to Holden Lewis, NerdWallet’s authority on mortgages and real estate, mortgage interest rates are rising.  He states that they are going to rise modestly in December, especially toward the end of the month.

He explains. . .  As 2021 comes to a close, bond traders will cash out so they can take a few days off without worrying about having to react to abrupt price changes. When the traders sell their mortgage-backed securities just before Christmas, the prices will go down and yields will go up. Mortgage rates will follow yields on that upward trajectory. Most of this will happen the last week of the year.

The question is. . . will higher interest rates cool off the red hot Atlanta new home and resale market? What do you think?

Looking Ahead to 2022

So, then what? According to Lewis rates will continue trending upward throughout 2022. This is because inflation will remain elevated, the Federal Reserve will raise short-term interest rates next year, and hiring will remain strong.

And yikes — Lewis says that rates are likely to go up enough to notice. He and his colleague Kate Wood  compiled mortgage-rate predictions from Fannie Mae, Freddie Mac, the Mortgage Bankers Association and the National Association of Realtors into their 2022 housing market trends report. The compilation of this is an increase of about three-eighths of a percentage point to the 30-year fixed-rate mortgage in 2022.

That puts the 30-year fixed a little under 3.5% toward the end of 2022 in NerdWallet’s daily mortgage rate survey.

What happened in November

Lewis predicted that inflation would push mortgage rates higher in November but they wouldn’t rise steeply. However, instead of the slow rise that he expected, mortgage rates inched up and down throughout November. The average rate on the 30-year fixed-rate mortgage was about the same as October’s — despite inflation rising to 6.2%, according to the Consumer Price Index.

Want more information? Check out NerdWallet’s Mortgage Outlook for December.

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