What will happen with interest rates in 2022? | Business

One of the big questions for consumers looking to buy or refinance a home is what will happen to interest rates in 2022. Interest rates, although still at low history, could see some movement in 2022. Here’s what you should come to expect if you’re going to buy a home in the coming year, and how changes in interest rates can affect your ability to borrow.

Interest rates for the 30 year mortgage are currently between two and three. Inflation is now starting to show its ugly head, and it is starting to become more of a threat to financial investments, including mortgage-backed securities, which directly influence the direction of mortgage interest rates. As a result, it is possible that mortgage rates based on these economic factors will rise at least through the first half of 2022. When the Federal Reserve then begins to raise interest rates to offset inflation, which is on set to occur around the start of the summer of 2022, it is likely that mortgage interest rates will likely drop back to the levels they are currently at. Rising interest rates mean that the housing market will be a little softer. Will always be a tight supply but will otherwise always be soft. This means that as many people will be looking for houses with an interest rate of 3.75 for example on a fixed rate of 30 years as they are today for a fixed rate of 3% on 30 years. This is something you should weigh into your scenario when it comes to buying a home.

If you’re considering refinancing your home, whether it’s to take out cash to pay off debt, do some renovations, or get out of the monthly PMI, now is a good time to pull that trigger, because interest rates don’t have not started their upward estimate. trend again.

If you’re pre-approved for, say, a $600,000 home purchase and your target interest rate, let’s just say it’s 2.875%. An interest rate such as 3.5% if rates go to 3.5% represents a change of 0.625% and an interest rate for you based on what you could get compared to what you currently have . This interest rate change will change your payment by approximately $175 per month. $175 per month means you will need an additional income of $350 per month to offset this debt. The other way to look at it is $175 per month more mortgage payment which also means to offset this obligation you can pay off a credit card, car loan or installment loan to release the differential of $175 per month. $175 more per month in payment can influence whether you make an offer on this house or if you don’t. However, whether you’re pre-approved to buy a home now or in the latter part of 2022, you should still have at least $200 in payment per month for a variety of reasons. The $200 monthly payment buffer specifically gives you more flexibility when it comes to paying for your home, it also provides a wider network of opportunities. That means if you can say “ok I’m ok with payment XYZ but I’m also ok if that payment is $175 more per month” that’s the right expectation, you should buy a House. $175 to $200 per month payment can add up to $30,000 to $40,000 in buying power for a home. This means the difference between a $600,000 house and a $635,000 house for example. This is something you should weigh in your financial mix when deciding whether or not to get financing.

So how do you know if it’s a good time to make an offer on a home and close it or if it’s a good time to refinance your home? Honestly only a local loan officer who understands the market and understands the dynamics of trading mortgage backed securities. A loan officer who can best advise you on the optimal time to secure a payment, which is built into your budget, is probably the most pragmatic thing you can do to improve your bottom line. Ultimately, it’s important to recognize that interest rates in 2022 are more than likely going to rise. There’s a probably 80% chance they will rise, and the Fed’s actions to combat rising inflation will almost certainly lead to lower rates at the end of 2022.

Scott Sheldon is a local mortgage lender, with a decade of experience helping consumers purchase and refinance primary homes, vacation homes and investment properties. Learn more about www.sonomacountymortgages.com.

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