Mortgage Rates Reached a 22-Month High of 3.75% Last Week — Faster Than Experts Predicted. Here’s What to Expect Next – NextAdvisor

February 5, 2022 By admin

Credit Cards
Financial Goals
Follow Us
Current Refinance Rates, February 4, 2022 | Rates Ratchet Higher to 3.87%
Here Are Today’s Mortgage Rates, February 4, 2022 | Rates Spike to Near 20-Year High
Mortgage Rates Hit 3.76% This Week — Their Highest Since March 2020. How Rising Rates Could Push More Homebuyers Into the Market
Refi Rates Today, February 3, 2022 | Rates Tick Up, 30-Year Rates Remain Low
Today’s Mortgage Rates, February 3, 2022 | Rates Inch Higher for Homebuyers
Refi Rates Today, February 2, 2022 | Rates Advance
Current Mortgage Rates, February 2, 2022 | Rates Moved Higher
These 5 Single Parents Beat the Odds to Buy a House, One With as Little as $400 Down. Here’s How They Did It
This Austin Couple Found the Perfect Home In a Competitive Market. Here’s How They Made It Theirs
How to Protect Yourself If You Need to Back Out of a Home Purchase
Katie Collins is an editor for NextAdvisor. Her previous experience includes editing and coordinating personal finance coverage…
The average 30-year fixed mortgage rate jumped up again last week, to 3.75% — the highest it’s been since March 2020.
Last week’s increase of 12 basis points is the fourth consecutive week of increasing rates, and now 48 basis points — 3.27% to 3.75% — over a four-week span. 
Rising inflation has been cited by experts and the Fed as a major factor behind rising rates. The December 2021 consumer price index released last week by the Bureau of Labor and Statistics (BLS) shows 7% inflation in the last 12 months, which is the largest inflation surge in 40 years. Higher-than-expected inflation could cause the Fed to increase rates faster than planned, pushing rates upward, Redfin chief economist Daryl Fairweather told us recently. 

While some experts have said new COVID-19 surges could stall rising rates, that hasn’t been the case so far this year. New variants and potential surges they might cause could still pose new threats to economic progress, putting downward pressure on mortgage interest rates, Zillow economist Nicole Bachaud recently told us

However, there is reason to believe that rates could continue rising as they have lately even with new variants and surges. Since COVID-19 first hit the U.S., subsequent surges in cases haven’t had as much of a negative impact on the economy as the initial wave, HousingWire’s lead analysts Logan Mohtashami, recently told us.  
Recent statements by Federal Reserve Chairman Jerome Powell reflect what we have seen the last four weeks: With the economy improving, the Fed expects to raise rates three times in 2022. 
Mortgage rates may have reached levels not seen in nearly two years, but they are still historically low and lower than they were before the pandemic started. For homebuyers and homeowners, making a good decision about buying or refinancing has much more to do with personal circumstances than current mortgage rates.
Here’s what this means for borrowers.  
Last week’s average mortgage rate is based on mortgage rate information provided by national lenders to, which like NextAdvisor is owned by Red Ventures.
Many experts predicted mortgage rates would reach this level in 2022. However, most experts did not predict it to happen this quickly. chief economist Daniele Hale and Fairweather both recently told us they predicted mortgage rates would reach 3.6% by the end of 2022, not in the first month of the year. 
Mortgage Bankers Association’s economist Joel Kan forecasted the average 30-year fixed mortgage rate to hit 4% by the end of 2022, citing economic growth as one of the biggest reasons behind his prediction. If rates continue to increase like they have been lately, his prediction will come true much earlier than anticipated, as well.

New COVID variants and surges in cases haven’t had as much of a negative impact on the economy as the initial wave, so even while the pandemic continues, rates will likely continue increasing, said Mohtashami.
On a possible plus side for homebuyers, rising rates could cool down the housing market somewhat. “If you have to wait until later in the year when mortgage rates are higher, I think you’ll have the benefit of a lot more selection,” Fairweather says. At the end of the day, buying a home should be a long-term decision. You can’t really lose as long as you’re staying in the house for a long time, she says: “In the long run home values will go up.”
Here’s a look at how current mortgage rates compare to where they’ve been over the last few years, along with inflation rate and national home price for each year. 
*As of November 2021, NAR data

When looking at the average 30-year fixed mortgage rate over a longer period of time, there is a more important trend to point out: Today’s rates aren’t as high as they might seem in the context of the last two years. Last week’s new average rate of 3.75% seems high compared to the 2.93% we saw in early January 2021. But 3.75% is still just a hair over the lowest average rate recorded in 2019.
Last week’s rate increase was also evident in the latest Freddie Mac survey, a long-running mortgage rate average watched by industry experts. The Freddie Mac survey had the average 30-year mortgage rate average at 3.56% last week, an increase of 11 basis points over its previous week average. This is the largest weekly Freddie Mac increase since March 2020.
Freddie Mac is a government-sponsored organization that purchases home loans on the secondary market. Its survey methodology and the time period in which it collects data each week differs from other surveys, such as the Bankrate survey referenced throughout this article. While different mortgage rate averages will show slight variation, they do show similar overall mortgage rate trends over time.
Rising mortgage rates might make it seem like refinancing is no longer a good option, but that’s not necessarily true. Mortgage rates at current levels are still considered favorable compared to the 4%+ rage they were prepandemic. A good rule of thumb is if you can score a new mortgage rate that is close to 0.75% lower than your current rate, it could be a good move to refinance. 
Homeowners who are on the fence about refinancing may want to consider it. Mortgage rates are expected to continue their upward trajectory in the long term, so it may be worth crunching the numbers with a few lenders to see if you can benefit. 

A rate and term refinance could go a long way in reducing not only your monthly payments but also the amount of interest paid over the life of the loan. With home values across the country having increased over the past year, you could also take advantage of the increased equity in your home by doing a cash-out refinance, home equity loan, or HELOC. These can be a useful tool to help pay off high-interest debt, pay for college expenses, or fund a home improvement project
Experts believe the housing market is starting to cool down. But the demand among buyers is expected to stay high, Kan recently told us. “We have a lot of younger people in the population entering, or who are already at, the prime homeownership age,” Kan says. But with housing prices having increased over the past year, you might need a larger down payment of at least 10%, but ideally 20%, to stay within an affordable range
Higher mortgage interest rates will impact your buying power, Kerry Melcher, head of real estate at Opendoor, recently told us. “Understanding your financing is really important,” she says, meaning it’s essential to understand the upper limits of your homebuying budget. You may be able to qualify for a loan amount that is more than you’re comfortable with, and you don’t want to get caught up in a bidding war and end up with a higher-than-expected monthly payment. 
This is why housing experts recommend planning ahead by:
Stay in the know with our latest home stories, mortgage rates and refinance tips.
In your inbox every Thursday
Thanks for signing up!
We’ll see you in your inbox soon.
I would like to subscribe to the NextAdvisor newsletter. See privacy policy
Learn all about finances in next to no time with our weekly newsletter.
In your inbox every Tuesday
Thanks for signing up!
We’ll see you in your inbox soon.
I would like to subscribe to the NextAdvisor newsletter. See privacy policy
Tell us what you think
Did this article answer your questions?
Time is Up!
Let us know what questions you still have about this topic or any others.
Time is Up!
Thanks for your feedback!
Before you go, sign up for our newsletter to get NextAdvisor in your inbox.
Thanks for signing up!
We’ll see you in your inbox soon.
I would like to subscribe to the NextAdvisor newsletter. See privacy policy
Credit Cards
7 min read
Personal Loans
7 min read
Credit Cards
7 min read
5 min read
At NextAdvisor we’re firm believers in transparency and editorial independence. Editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by our partners. We do not cover every offer on the market. Editorial content from NextAdvisor is separate from TIME editorial content and is created by a different team of writers and editors.
Subscribe to our newsletter
Thanks for signing up!
We’ll see you in your inbox soon.
I would like to subscribe to the NextAdvisor newsletter. See privacy policy
Follow us
© 2022 NextAdvisor, LLC A Red Ventures Company All Rights Reserved. Use of this site constitutes acceptance of our Terms of Use, Privacy Policy (Your California Privacy Rights) and California Do Not Sell My Personal Information. NextAdvisor may receive compensation for some links to products and services on this website. Offers may be subject to change without notice.