January 2nd, 2022 5:39 PM by Regina Rickles, NMLS# 222362
Mortgage rates decreased slightly at the end of December. But they should turn around in January and keep climbing throughout 2022.
Recent declines can be pinned on the Omicron variant. The ultra–contagious strain caused renewed fear about traveling, dining out, in–person shopping, and other key economic activities that were just beginning to normalize before the variant hit. This resulted in a minor slowdown in the pace of economic growth and dragged mortgage rates slightly lower.
But consumers’ outlook on the economy is still positive overall. And the forces driving interest rates upward – including record–high inflation – are still present.
Perhaps most importantly, the Federal Reserve recently announced it would speed up the pace of tapering to combat those high inflation numbers.
The Fed expects to end its mortgage stimulus program by March or April of 2022. That could mean significantly higher mortgage rates in the first quarter of the year.
Remember that the Fed’s bond purchases throughout the pandemic were keeping mortgage rates artificially low. As the Fed pulls back (‘tapers’) those purchases, mortgage rates will almost certainly rise.
As of its last meeting, the Fed expects to end its mortgage stimulus program by March or April of 2022. That could mean significantly higher mortgage rates in the first quarter of the year.
For now, though, interest rates are still at historic lows.
If you’ve put off refinancing a home or purchasing a new home, January 2022 could be the time to do it. The window to take advantage of today’s low–rate environment could close quickly.