Several factors make it likely that we will see an increase in mortgage rates in the short term. If you are planning to borrow money, consider acting now before mortgage rates rise. You should keep an eye on mortgage rate trends if you:
- plan to buy a home soon and need a mortgage lender
- are considering a cash-out mortgage to finance home improvements
- would like to refinance your mortgage at a low rate and pay it off sooner
So, will mortgage rates go down in 2022? We here at Anew Lending, a trusted mortgage lender in Sacramento, CA, want homeowners and potential homebuyers in the Sacramento area to be aware of mortgage trends.
Inflation Will Push Rates Higher
Inflation hit the United States hard in the second half of 2021, spurred by supply disruptions and economic recovery. The new year is likely to see continued inflation. Lenders know that the dollars they lend now will be worth more, adjusted for inflation, than the money they get back when borrowers repay the loan.
The Federal Reserve Will Raise Interest Rates to Curb Inflation
An overheated economy can cause inflation. The Federal Reserve Bank increases the federal funds rate to put the brakes on the economy and rein in inflation. Each percentage point increase of the Fed rate means increased mortgage rates for home buyers.
Recovery from COVID Might Increase Demand for Financing
Even as the omicron variant of COVID spreads throughout the United States, with infection rates topping 100,000 new cases per day, the economy has begun to adjust to COVID and recover from the challenges of 2020 and 2021. Recovery brings new demand for housing, new construction, and the financing to pay for it.
Home prices have been rising along with the economic recovery. Experts predict high numbers of mortgages in 2022 and 2023. This means that lenders will be able to charge higher interest rates and still find demand for lending. Save up to cover a deposit and any closing costs.
What You Can Do Before Rates Go Up
As you prepare to take out a mortgage, try to improve your credit score. A higher credit score shows lenders that your loan is low in risk. They will be more willing to lend to you at an attractive interest rate if you have good credit. Use a mortgage calculator to estimate how much you are likely to pay
Lock in Attractive Rates Now with Anew Lending
Will mortgage rates go down? Experts say don’t count on it. Borrowers who act now can benefit from lower rates. For more information on fixed and adjustable-rate loans by Anew Lending, call us at Anew Lending at 916-655-9306 or fill out our simple online application for pre-approval today.