Rates have been low since the pandemic started in March 2020. Lately they have inched up, but still remain low. Nadia Evangelou, senior economist and director of forecasting at the National Association of Realtors, expects interest rates will continue to rise in the year ahead, largely due to inflation.
The Federal Reserve is reducing its monthly bond purchases and this will cause mortgage rates to go up as well. Evangelou expects 30 year rates to average 3.3% in the first quarter of 2022 and 3.5% for all of 2022. This isn’t a huge jump, so homebuyers shouldn’t panic.
It is likely that the lack of homes for sale will still be an issue in 2022. We should expect a very competitive market through 2022 with multiple offers on most properties.
This tight inventory and strong demand will most likely keep prices high – a strong seller’s market.
Conforming loan amount increases:
Effective January 1, 2022, the Federal Housing Finance Agency has raised the conventional conforming loan limit on a single family home to $647,200 (up from $548,250 in 2021). This means that the government is acknowledging the steep increase in home values and is giving greater purchasing power to consumers by increasing the maximum lending limit allowed by banks. This will help consumers with high value home purchases in our area and allow more borrowers to qualify under the conforming loan amount versus a jumbo loan, which typically has higher interest rates.
It is as important as ever to get pre-approved prior to starting your house search. Capitol Bank is available for your pre-approval needs as well as helping you every step of the way through your home-buying process. Please CLICK HERE to connect with our mortgage team.