Fannie Mae announces mortgage rates will end in 2022 at 3.3%


Fannie Mae analyzed the levels of inflation and what it could mean for the future of interest rates. (iStock)

Fannie Mae has increased his inflation forecast for 2021, according to the latest commentary from his economic and policy research group, in addition to forecasting that interest rates will continue to rise slowly until the end of the year. as the US economy surpasses the COVID-19 pandemic.

The mortgage giant raised its expected inflation rate to 6.2% per year in the fourth quarter, but expects recent price gains to start to moderate in the coming quarters. However, he said that the the build-up of strong inflationary pressure leaves it well above the Federal Reserve’s 2% target until 2023. It also expects the Fed to start raising interest rates by 25 point increments as early as the fourth quarter of 2022, and could start even earlier if inflation continues to crop up.

“The main risks to the forecast remain the pace of the recovery in global supply, the availability and cost of labor, as well as the extent of federal monetary and fiscal largesse,” the company said. in its forecasts.

If you want to take advantage of today’s real estate market interest rates while they remain near their all-time low, consider refinancing your home loans to save money on your monthly payments. Visit Credible to find your personalized refinance rate and see how much you could save.

TAKE ADVANTAGE OF THE HOUSING MARKET NOW BEFORE RATE INCREASES, SAYS EXPERT

Inflation is not transient, mortgage rates could rise

In a December 1 hearing before the Senate Banking CommitteeFederal Reserve Chairman Jerome Powell said maybe it was time to stop using the word “transient” in reference to inflation.

“We tend to use it to mean that it won’t leave a permanent mark in the form of higher inflation,” he said during the hearing. “I think now is a good time to take that word out and try to make it clearer what we mean.”

Now, Powell is starting to consider extending the end of its cut and further slowing its asset purchases as the Fed prepares to be able to hike the fed funds rate.

“The Fed is on the move, driven by inflation exceeding expectations and appearing less transient than expected,” said Doug Duncan, senior vice president and chief economist at Fannie Mae. “They gave themselves leeway to change policy by committing to the rate of asset reduction for just two months, during which adjustments could be made afterwards.”

“Economic growth continues to slow, but not in a rush; and as rates have yet to react strongly, real estate and mortgage activity remains very strong,” Duncan said. “Market participants will have one eye on the monthly inflation releases and the other on the Fed in the coming months. political actions will be essential – their choices will have an impact on economic growth as well as on real estate and mortgage activity. “

Fannie Mae predicts that because the Fed will start raising rates in 2022, the average 30-year fixed-rate mortgage will see higher rates – averaging 3.3% next year and going down to an average rate. 3.5% in 2023, depending on their mortgage. rate forecast.

If homeowners want to take advantage of low mortgage rates now, which hover just above 3% for the 30-year mortgage according to the latest data from Freddie Mac, they can consider refinancing their mortgage and saving up to hundreds of dollars on your monthly payment. Visit Credible to compare multiple mortgage lenders at once and see how much you could save.

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Mortgage refinancing will slow down in 2022

As mortgage interest rates rise, Fannie Mae predicts that the total number of borrowers looking to refinance will decline and that refinancing volumes in the United States will reach $ 2.5 trillion in 2021. Subsequently, the company expects volumes to decline in 2022 and 2023 to $ 1.3 and $ 1.1 trillion, respectively. .

However, as refinancing slows and mortgage rates rise, home purchase volumes are expected to increase as the home buying market remains strong and prices rise. Fannie Mae expects mortgage purchase volume to reach $ 1.9 trillion in 2021 before rising 6.8 percent to $ 2 trillion in 2022.

If you want to take advantage of current mortgage rates before they start to rise, consider refinancing your mortgage now. Contact Credible to speak to a mortgage expert and get all of your questions answered.

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