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Interest Rates | Where are they going in 2022?

Estimated Reading Time: 1 Minutes and 57 Seconds

This BLOG will help you understand where interest rates are heading in 2022, how that affects mortgage rates, and the reasons why. You’ll also see how interest rates have been moving since 2012. 

Table of Contents:
Mortgage Rates from 2012 – Present
Key Points
Should I Buy a Home In 2022?

" While rates are off the lows, today’s rates are still historically at ultra-low numbers." Click To Tweet

Since March of 2020, and the initial government response to the effects of Covid-19 on our economy, rates have been at historically low levels. We found 30-year fixed rates bottoming out just below 3%. As the United States has learned to live with COVID-19 and an economy growing briskly, we have seen the onset of higher Inflation Icon inflation. With a tight labor market, higher prices everywhere, and good economic growth, we all understand that rates will rise off these historic lows. But even with the recent increase in interest rates, we are still well below the historic average for mortgage rates.

Mortgage Rates from 2012 – Present:

Mortgage Rates from 2012 - Present Graphic

Couple of key points to keep in mind:

Plus Icon The Federal Reserve is still SUPER accommodative concerning rates. While rates are off the lows, today’s rates are still historically at ultra-low numbers. The Federal Reserve will be moving their benchmark rate higher in the years to come, but we have a long way to go to get back to the rates we saw before March 2020.

Plus Icon MSHDA controls interest rates for its down payment assistance program. The interest rates for the down payment assistance program are set by MSHDA and have moved very little over the past few years. So, these low rates should be around for a while yet.

Plus Icon Trends will continue to pressure interest rates through 2022. With less accommodation by the Federal Reserve, higher inflation, falling unemployment numbers, and rising wages, the interest rate structure will be tilted to higher rates.

Should You Buy a Home in 2022?

Buying a home is always a combination of home prices and interest rates. While rising rates and more expensive home price means less purchasing power, per the National Association of Realtors, the Midwest is still the most affordable area in the country. Projections continue to point to higher home prices, so locking in today’s lower rates and home prices can be a long-term gain. Remember, buying a home gives you cost certainty for your housing needs. Once you purchase a home, you have locked in a payment that will rise very slowly compared to rents.

November Housing Affordability

Owning a home comes with many benefits: a great way to build net worth, payment certainty over the long term, and pride of ownership. Buying today can be a sensible decision with homes still being very affordable.

"Once you purchase a home, you have locked in a payment that will rise very slowly compared to rents." Click To Tweet
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As mentioned above, we most likely are not going back down to the incredibly low interest rates we saw in 2021. However, overall interest rates are still historically low as rates rise this year. 2022 still is a good year to purchase a home. Take advantage of these still favorable rates! If you don’t believe you could afford a home due to the lack of funds for a down payment, closing costs, or other mortgage pre-paid items, then don’t worry. You may be eligible for MSHDA’s DPA program. Schedule a time to discuss your options by clicking HERE.

Did you know Learn more about how you can get up to $10,000 in down payment assistance when purchasing your next home.

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