Trends for Buying a Home in 2022

Happy New Time of Year to buy a home! Starting a new year gives us all new ideas and energy to find that home we’ve been seeking.

What’s new this year? Most people are aware of where mortgage rates are and where they might or might not go as the year progresses, so I want to share a little about historical rate trends as a start. Since 1972, the average annual 30-year mortgage rate has fallen according to data from Freddie Mac’s Primary Market Survey. The current 30-year rates ranked historically low through last year. This year, mortgage rate trends will be influenced by the Federal Reserve. This is because the Federal Reserve is reducing its support of the bond market that was helping rates stay low. The Fed does not have control of mortgage rates, but since the Fed sets short-term rates, there is some influence.

How does that factor into trying to buy a home in 2022? For some of us, we will want to factor in the potential for the rates to slightly increase. There will be more time for first-time homebuyers to work with their mortgage advisor, because many people will not be as interested in refinancing. This is great news if you are a first-time homebuyer. The industry like many through the pandemic has been challenged with having enough people to process the demand for buying homes. You’ll have better access.

The trend to work with your mortgage advisor hand in hand with your real estate professional will continue as homebuyers will want to lock their rate with their advisor when they do find the right home. I anticipate that there may be a benefit of more homes and a greater selection of homes, because some people will not want to be as adventurous with expected rate increases. To that I say that when one looks back to 1972 and the rates that existed in that time, we should look for the benefits of a less crazy housing market in 2022. Demand will still be strong for homes; and we should remember that buying a home is a long-term decision. The benefit of buying a home is that traditionally home values do go up.

Another trending topic surrounding mortgages is inflation. Inflation is uncertain, yet if demand for mortgages continues trending forward like I anticipate, higher than expected inflation could push rates by causing the Federal Reserve to increase the federal fund rate faster than they are indicating. However, mortgage rates typically do not increase quickly and so any increases should be spread evenly during the year.

While trends are important, it is most important to recognize that specific factors like behaviors reflected in your credit report are in your control. The pandemic brought numerous investors to invest in Treasury and mortgage bonds which moved yields and rates lower than we ever thought we would see.

Be sure to find a licensed advisor that you know is familiar with your region, who serves your best interests, your community, and has history in the community as well as will be there for you for the duration. Call 360-607-9312 or email MPattullo@FinanceOfAmerica.com for help preparing your credit application to best evaluate your mortgage options. We are your local advisor.

We lend where we live,
Mike