12/24/2023 0 Comments Freddie mac interest rate forecast![]() A consensus estimate collected by the National Association of Realtors and released in December foresees home prices rising 5.7% in 2022, less than half of 2021’s estimated 14.6% price growth. The average rate on a 30-year fixed-rate mortgage from 2011 through the end of 2021 was 3.85%, according to Freddie Mac data, while the average rate since Freddie Mac started collecting the data in 1971 is 7.80%.Īs rates rise in 2022, economists expect home prices to continue to grow, though at a slower pace than in 2021. Still, such rates would be on the low end of historic averages. The average 30-year fixed-rate mortgage was 2.95% in 2021, 3.11% in 2020, and 3.94% in 2019, according to Freddie Mac data. The demand for housing continues to remain stable, mainly due to low mortgage rates coupled with first-time homebuyers and other demographic tailwinds helping to support stability in the housing market this year. Such a rise would signify a return to prepandemic mortgage rates. We forecast rates to average 3.6 in 2022 and 3.9 in 2023. ![]() Available Homes Are Increasing There is a strong relationship between the available supply of homes and home price growth. For instance, a 1 increase in mortgage rates would change home price growth from 11 to 7. Ultra-low mortgage rates should make homebuying a favorable proposition in 2022 and beyond. That represents just a 76-per-month increase on a 250,000 mortgage. Freddie Mac’s most recent quarterly economic outlook, released in October, forecasts rates averaging 3.5% this year and ending 2022 at 3.7%. Freddie Mac analysis shows that a 1 increase in mortgage rates results in home price appreciation that is 4 percentage points lower. According to Freddie Mac, the 30-year rate average at the time of this writing is around 3, yet the average of 2022 forecasts is just 3.55. “With higher inflation, promising economic growth and a tight labor market, we expect rates will continue to rise,” said Sam Khater, Freddie Mac’s chief economist, in a release. ![]() It’s likely that this is just the beginning for mortgage rate increases in 2022.
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