30-year mortgage rates rise as Federal Reserve prepares 2022 rate hikes

Interest rates rose for 30-year fixed-rate mortgages, increasing to 3.12% annual percentage rate (APR) for the week ending Dec. 16th, according to Freddie Mac's Primary Mortgage Market Survey. This is up from 3.1% last week, and from 2.67% last year, the Primary Mortgage Market Survey showed. 

"Mortgage rates inched up as a result of economic improvement and a shift in monetary policy guidance," Freddie Mac Chief Economist Sam Khater said. "While house price growth is slowing, prices remain high due to solid housing demand and low supply. We expect rates to continue to increase into 2022 which may leave some potential homebuyers with less room in their budgets on the sideline."

If you want to take advantage of current mortgage rates before they increase further in 2022, consider taking out a mortgage refinance to save on your monthly payments and over the life of the loan. Visit Credible to find your personalized interest rate without affecting your credit score.

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Interest rates to rise in coming weeks

While interest rates rose for 30-year mortgages, movement for other loan types varied. Rates for 15-year mortgages fell to 2.34%, down from 2.38% last week and up from an average rate of 2.21% last year. The five-year Treasury-indexed hybrid adjustable-rate mortgage remained steady from last week at 2.45%. This is down from 2.79% last year. 

Despite these modest changes in mortgage refinance rates, which are hovering near all-time lows, economists expect rates to rise in the coming weeks. 

"Following the Fed’s announcement to accelerate the tapering of its bond-buying program, and projections from members of the FOMC that three hikes in the Fed funds rate will be appropriate policy in 2022, the Freddie Mac fixed rate for a 30-year loan moved only modestly higher, registering 3.12% this week," Realtor.com Chief Economist Danielle Hale said. "Concern about the potential impact of the omicron variant – for which expectations are evolving rapidly – largely offset stronger economic data including an uptick in both builder and small-business confidence. 

"Confirming the builders’ upbeat outlook, construction data for November exceeded expectations," Hale said. "Coupled with the Fed announcement, however, we expect this stronger economic data to lead to a bigger uptick in mortgage rates in the weeks ahead unless new information suggests that omicron is a bigger concern."

You can take advantage of lower interest rates through a mortgage refinance, which could reduce your monthly payments. Visit Credible to compare multiple mortgage lenders at once and choose the one with the best interest rates and loan terms for you.

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Rising interest rates and high home prices not deterring homebuyers 

Experts say that despite rising home prices and interest rates, borrowers are eager to purchase a home and are even upping their budgets.

"The housing market remains competitive, with our data showing that asking prices jumped this week," Hale said. "With rents also surging, up 19.7% in the last year, the rental market isn’t offering any relief from high housing costs. In response to these realities, first-time homebuyers are more determined than ever. 

"Our recent survey data shows that aspiring first-time homebuyers are upping their home budgets and more willing to offer above asking-price to be successful in today’s housing market," she said.

If you are interested in buying a new home or refinancing your current mortgage while today’s rates continue to be at near-historic lows, contact Credible to speak to a home loan expert and get all of your questions answered.

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