What will the mortgage rate market look like by the end of 2022?
The year is rapidly coming to a close (It’s almost November!), and Yahoo Finance offered a prediction on where mortgage rates will end the year. Their team spoke to several industry experts and the consensus was that most wouldn’t be surprised to see mortgage rates continue to tick upwards before the end of the year.
Christina McCollum, a regional manager for Churchill Mortgage, stated that she is “anticipating rates to reach the low 8s by the end of this year.” She went on to say, “It’s staggering when you consider how drastic the rise has been from the record lows we saw during the peak days of the pandemic.” However, she did predict heavy activity in December
Will a decline in home prices help the Fed meet its inflation goals?
According to Business Insider, a 20% decline in home prices would help the Federal Reserve get to its goal of a 2% inflation rate. A decline in home prices has already been seen in recent housing reports, but a further retreat would really help reduce the core CPI metrics, which are a direct measure of inflation. ING’s chief international economist James Knightley stated, “we could see a much swifter turn in shelter CPI than we would have normally expected, which given its one-third weighting within the CPI basket of goods and services, could help to get inflation down to 2% far quicker than many in the market expect.”
So, lower house prices aren’t just good for home buyers, they could also help reduce inflation, which should get the Federal Reserve to stop raising interest rates.
How much do you need for a down payment?
A recent survey created by LendingTree shows that down payments on homes in the 50 largest metropolitan areas in the U.S. are up by over 35%.
Home buyers have historically looked to put down around 20% on a new home, but with elevated home prices, buyers are putting down a smaller percentage, but more money, the study shows.
All five of the most expensive metro areas listed in the report were on the West Coast, with the average down payment on a home in the San Jose metro area at $142,006.
The study also cited that conventional loans that come with a 3%-to-5% down payment options or FHA loans with a 3.5% down payment options have become
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