Mortgage rates went up again recently, and most mortgage experts anticipate that interest rates will continue to rise as 2022 progresses. Economic inflation, the pandemic and other factors are gradually pushing mortgage rates upwards. This is inspiring more home buyers to take action. Winter home buying is up significantly.

Current Average Mortgage Rates

Though still quite low by historic standards, mortgage rates did recently hit their highest level in almost a year. The current average interest rate is at 3.52% for 30-year fixed-rate mortgages with conforming loan balances and down payments of 20%. This is up from the previous week when it was 3.33%. This is the highest average rate since March 2020.

All the signs are pointing to the fact that this will probably not be the only rate increase as this year goes on. There may be some dips and variances, but the general trend is heading upward. Those looking to buy a home this year have taken notice of the rising mortgage rates. This is why mortgage applications last week increased by 2% compared to the previous week.

Increased Winter Home Buying

The winter season is generally the slowest real estate market of the year throughout the country. This is even true here in San Diego, where the weather is much less of a factor than it is elsewhere. We have the holidays and the turnover to a new tax year, so it’s generally an awkward time to go through the home buying and moving process. There are generally fewer sellers this time of year, as well. The inventory remains low, but buyers are taking action this winter in anticipation of larger mortgage rate hikes to come.

“Mortgage rates increased significantly across all loan types last week as the Federal Reserve’s signaling of tighter policy ahead pushed U.S. Treasury yields higher,” said Joel Kan, an economist with the Mortgage Bankers Association (MBA). “The housing market started 2022 on a strong note. Both conventional and government purchase applications showed increases, with FHA purchase applications increasing almost 9%, and VA applications increasing more than 5%.”

Home Refinancing

Meanwhile, refinance applications dropped slightly (0.1%) last week. This is no surprise with the rate increase. However, refinancing is still very popular right now. Homeowners with older mortgages and higher rates are still looking to refinance if they can qualify for a lower rate. This may result in lower monthly mortgage payments and/or a shorter payoff term.

The Spring Market Has Sprung Early

The rise in winter buyer demand may lead to more seller activity ahead of the usual spring market, as well. Housing inventory will likely remain low throughout 2022 as home prices continue to rise. However, higher mortgage rates will eventually cut into buyer demand and we may start to see the market level out over time. We will have to see how the threat of rising rates effects the real estate and mortgage markets this year.

If you are ready to buy or refinance your home loan, it’s important to get pre-approved as soon as possible and lock in a great mortgage rate while you can. Contact Transparent Mortgage today to get started. Give us a call at (619) 431-0754.

Beau Hodson

Beau Hodson

About the Author Since 2003, Beau has been a mortgage professional and is a leading mortgage broker and lender in San Diego. As Founder and Senior Mortgage Advisor at Transparent Mortgage, he is truly committed to serving the needs of his clients and raising industry standards for integrity and transparency.