The Direction of Interest Rates in 2022

The Direction of Interest Rates in 2022

Well it only took a “Fed Minute” to “destroy” mortgage rates. Since Jan 6, we’ve seen perhaps the fastest increase in rates as they approach the 4% landmark. Many experts don’t think it’s even close to over.

What’s the Fed Doing?

The Fed minutes released on Jan 6, crushed the mortgage markets and they’ve been in a free fall. Recently we’ve seen a bump to the positive, i.e. rates rallying slightly lower, but this is more aimed at the sell offs in the stock market and will not be long-term.

Rates Are Going Up

How high you ask? Allow me to get out my crystal ball? Hah, well seriously, who knows. I somewhat agree with the experts that say 4.5% is in our near future, but I think the major shock and awe has already happened. I feel that rates will vacillate in the 3.75% to 4.25% for 30 year money throughout most of this year (at least the first half) and then trickle back down in 2023.

Yes. Adjustable rate mortgages, such as 10/6 ARMs are leading the way since you can get a rate about .5 to .75% lower than a 30 year fixed. So, if your clients don’t plan to be in the home past year 10, it’s a great option as they get the same benefit of a fixed rate during the time they are in the home for a much lower rate than an actual fixed product.

If you’d like to discuss this further, please reach out and I’ll connect you with one of my lender partners!

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