Compared to the 2.66% rate seen from December 2020 through January 2021, we will see mortgage rates rise more in 2022. Due to high real economic growth in the first quarter of 2021, which allowed a $1,400 stimulus for individuals under the American Rescue Plan Act, rates are looking up. This means that buyers who were attracted by low mortgage rates may have to take a step back. Rising mortgage rates will create a small dampening effect on demand.
According to Freddie Mac’s estimate, the 30-year fixed mortgage rate will average 3.4% in the fourth quarter of 2021, increasing to 3.8% in the fourth quarter of 2022. This would have a stabilizing effect on price growth as the price-inventory problem continues. Freddie Mac predicts that home prices will rise 6.6% in 2021, slowing down to 4.4% in 2022, while it expects new and existing home sales to reach 7.1 million in 2021 and then decline to 6.7 million homes in 2022.
As expected, mortgage originations will decline in 2022. Refinancing originations will decline from $ 2.65 trillion in 2020 to $1.83 trillion in 2021 and $770 billion in 2022. Single-family mortgage origination activity will decrease from $4.04 trillion in 2020 to $3.48 trillion in 2021 and $2.39 trillion in 2022. Source: ZHPE Survey