Borrowing costs have skyrocketed in the first half of 2022, impacting the bottom line of homeowners and new borrowers alike. Although they've moderated somewhat, mortgage rates are more than two percentage points higher than they were at the beginning of the year, after posting their largest increase in 28 years in the first quarter. Most real estate experts don't expect rates to rise much higher through 2022, but they won't fall anytime soon either.
Mortgage rate predictions for September 2022.
Home loan rates are in a tug-of-war between rising inflation, which is pushing rates higher, and Federal Reserve actions to keep inflation up, which indirectly lead to lower mortgage rates.
The Federal Reserve began raising its benchmark interest rate in March, and in July it increased it by 75 basis points-the largest increase since 1994.
"Freddie Mac economists predicted on July 20 that "markets have priced in further aggressive rate hikes" after the Federal Reserve hiked the federal funds rate by 1.5 percentage points through the first half of 2022. Mortgage rates have been extremely variable recently as a result,"
Because of these market conditions and the Federal Reserve's actions, most housing market experts expect interest rates to essentially trend sideways for the rest of the year. Average rates on a 30-year fixed-rate mortgage rose as high as 5.81% at the end of June, but settled at 5.55% on Aug. 25, according to Freddie Mac. It's still over twice as high as the rate of 2.86% from a year earlier.
As of Aug. 25, experts predict the 30-year fixed-rate mortgage will be between 5% and 6% in 2022:
Mortgage Bankers Association (MBA), "We continue to predict a 50% probability of a mild recession over the next 12 months given the weaker growth outlook. If a recession were to occur in the first half of 2023, the employment rate would likely reach 5.5% by the end of 2023, and mortgage rates would fall about 30 basis points from the baseline forecast [of 5.2%]."
National Association of Realtors (NAR) Chief Economist Lawrence Yun: "Mortgage rates may have peaked for this year as early as mid-June at nearly 6%. At that time, rates were too high in an uncertain inflationary environment. Now, with gasoline prices steadily declining, consumer price inflation may have already peaked as well. That means the 30-year mortgage rate could settle at around 5.5% for the rest of the year.
Realtor.com Chief Economist Danielle Hale says, "We're likely to see upward pressure in mortgage rates, but with much less intensity. Mortgage rates are currently at 5.5%, and I expect them to be between 5.5% and 6% by the end of 2022."
Freddie Mac: "We forecast 30-year fixed rates to average 5% in 2022 and rise to 5.1% in 2023."
Is it still time to refinance?
Americans are watching mortgage rates closely, and every time rates drop even slightly, more people apply for a mortgage. However, with interest rates still significantly higher than a year ago, applications remain at their lowest level in more than two decades, according to the MBA.
While refinancing options can result in a lower monthly payment, not all options will yield less interest over the life of the loan. For example, if you refinance a mortgage with an interest rate of 5% and a remaining term of 26 years into a mortgage with an interest rate of 4% and a term of 30 years, you'll have to pay more than $13,000 in additional interest.
Before you store around for a lender, you can use a mortgage refinance calculator to find out how much you could save.
You should also consider how long you plan to stay in your home, as closing costs can eat up your savings if you sell shortly after refinancing. Closing costs for refinancing range from 2% to 5% of the loan amount, depending on the lender. So you should plan to keep your home long enough to cover these costs and realize the savings from refinancing at a lower interest rate.
Keep in mind that the interest rate you qualify for will also depend on other factors, such as your credit score, debt-to-income (DTI) ratio, loan-to-value (LTV) ratio, and proof of regular income.
Current Mortgage Rate Trends
The average weekly mortgage rate for a 30-year fixed has jumped to 5.55% as of August 25, compared to just 3.22% at the start of the year.
The average cost of a 15-year, fixed-rate mortgage has also surged—up to 4.85% as of late August, compared to 2.43% in early January.
Current Mortgage Rates for September 2022
Mortgage rates have stayed below 4% since 2019 but began surging beyond that mid-March, exceeding 5% since late April.
Current Mortgage Interest Rates
Loan term Interest rate APR Monthly P&I Per $100,000
30-year fixed 6.24% 6.25% $629
15-year fixed 5.58% 5.60% $832
30-year jumbo 6.24% 6.24% $628
5/1 ARM 4.71% 6.54% $533
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