Monday Market Update: Mid-Year Rate Forecast From NAR®

Rate projections have changed nearly 2%... now expected to hover around 5.5% by year-end!

The originally National Association of Realtors® forecast was drafted based on market conditions in December 2021. Now that we are halfway through 2022, much has changed – including industry rate projections. Global factors such as the turmoil in Ukraine, coupled with inflation and moves by the Federal reserve as well as ultracompetitive conditions within the market have all led to one major theme: hampered affordability.

At the end of 2021, Realtor.com predicted that mortgage rates would arrive at 3.6%* by year end. That estimate is now 5.5%*. For frame of reference, rates hit a high of 5.3% last month, then settled around 5.1% (according to Freddie Mac data as of 6/13/2022).

*This figure represents the rate for a 30-year fixed loan.

Realtor.com Chief Economist Danielle Hale explains that “Rising interest rates have shifted the foundation of the economy as well as the housing market. So many homebuyers take out mortgages so that rising rates affect how expensive homeownership is. It’s causing buyers to make tough trade-offs and disrupting the housing market.”

In one example provided by Realtor.com, a buyer purchasing a home with a price of $447,000 with 20% down will now pay $400 MORE a month at a rate of 5.5% compared to 3.6%. In Silicon Valley terms, you can just about quadruple that figure to get a very rough estimate of how rates impact monthly payments.

This article is for informational purposes only; please be sure to speak with your own trusted home and finance professionals to dial in what rate increases mean for you and your own home buying and selling goals. Opportunities still exist – but navigating them requires even more strategy, analysis and precise regard for short- and long-term goals.

Resource Used: No One Saw It Coming: How a Housing Market Curveball Has Completely Changed What Buyers Can Expect in 2022

Warm regards,

Bobbi

Bobbi Decker
DRE#00607999

Broker Associate, Bobbi Decker & Associates
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