If you’re thinking of buying a new home or refinancing your existing mortgage in February 2022, tapping into the latest trends in the mortgage market can help you make more informed decisions. Having a basic understanding of recent developments like changes in mortgage interest rates, the current housing market, and economic conditions can save you time and money. 

At Neat Loans, we are dedicated to cleaning up the home financing process, so you can get your mortgage without the mess. That’s why we’ve distilled the latest in mortgage market trends into this quick monthly update.

The market is always changing, and interest rates are on the rise, so when you’re ready to make a move, check with a trusted advisor.  In the meantime, here’s what you need to know about mortgage market trends in February 2022.

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Are February 2022 mortgage interest rates currently higher or lower?

Mortgage rates are beginning to increase. After several months of steadily low interest rates, mortgage rates are on a slight increase. The federal reserve has been contributing to low rates by purchasing mortgage backed securities. In December 2021, they decided to slow purchasing these securities and plan on boosting rates three times during the course of 2022. This began impacting rates in the beginning of January 2022, where we saw rates at their highest since the initial decline in 2020. However, in the final weeks of January/early February, mortgage rates have surprisingly decreased again slightly, from 3.75 to 3.49% for 30 year fixed rates and from 3.1% to 2.69% for 15 year fixed rates. 

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Are mortgage interest rates going to increase in the near future?

In 2021, financial experts were predicting a large rate increase in the year 2022, beginning in January and steadily rising through December. While early January confirmed this prediction with a steady increase in interest rates announced by the Federal Reserve, we are now witnessing a more unpredictable market, as rates have seen a minor decrease in the past weeks. 

Despite this small dip, mortgage rates are expected to continue to gradually rise. While rates aren’t expected to spike rapidly, they are forecasted to increase gradually over the next couple of years, according to Freddie Mac. At the end of 2022, the organization predicted 30-year rates will be in the high 3% range, encroaching onto 4%. With this rise in rates, Freddie Mac predicts refinance activity will soften and the cost of housing will slightly decrease as demand decreases.  However, until we witness this rise in rates we cannot be sure it is coming. If you have been considering buying or refinancing while rates are still low, now is the time to take advantage of these rates before they are gone. 

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Are homes currently more or less expensive in February 2022?

Home prices have been historically high, but are expected to ease. Over the past year, there has been a growing demand for housing, and prices have risen to record levels across the nation. However, Freddie Mac experts predict the increased demand for housing will soften. Recent record high housing costs have discouraged buyers from purchasing new homes, despite low mortgage rates. 

Nationwide, the cost of housing has risen on average 18.1% throughout 2021. Recently, the rapid rate of home sales has begun to slow, and Freddie Mac experts predict the cost of housing will fall approximately 7% over the next few years. Despite this, forecasters still expect a strong housing market and continued high home prices in 2022, just not at the rapid level of growth seen during 2021. 

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Where are the hottest real estate markets? How fast are homes selling, and how much are they selling for?

Across the nation, homes sold in an average of 67 days in December 2021, 13 days slower than in 2020. We are still in the midst of a supply crisis; according to the Federal Reserve Economic Data, there were only 232,248 active listings in December 2021. This is down from 553,510 active listings in November 2021, 747,839 in 2020, and 1,310,899 in 2019. Buyers in 2022 face real challenges with the low supply of available housing, making it more important than ever to go into your housing search with a real estate expert at your side. 

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The hottest housing markets are moving to the suburbs. With record high home pricing in metropolitan areas, and a sudden shift to work-from-home lifestyles due to COVID-19, the majority of homebuyers are shopping in smaller cities.  Realtor.com conducted surveys to determine the hottest projected real estate markets for 2022. Determinants include where homes are selling the fastest (shortest time listed), and where the majority of buyers are searching property listings. Realtor.com projects Salt Lake City, Utah to experience a 15% growth in sales, and an 8% increase in price in 2022. Boise City, Idaho and Spokane/Spokane Valley Washington are close behind.

Most prospective homebuyers in the COVID-era are working families and first time home buyers looking for an average sized 3 bedroom single family home. A lot of homebuyers are moving out of expensive states such as California and New York. High taxes and reduced need for proximity to the city are causing locals of these areas to vacate to neighboring states, such as New Hampshire and Washington. 

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Conclusion: What are the main factors currently affecting February 2022 mortgage rates and the housing market?

Various factors can drive home prices, housing availability, and mortgage rates:

• The increase in COVID-19 cases due to the Delta and Omicron variants has created uncertainty, pushing the 10-year Treasury yields and interest rates lower.
• Interest rates could rise as a result of increased household spending, economic growth, rising demand for homes and mortgages, inflation, and U.S. jobs performance.
• The Federal Reserve (the entity designed to protect the U.S financial system and support a healthy economy, often called the Fed) has bought 40 billion dollars in mortgage-backed securities (MBS) per month to keep mortgage rates low. Mortgage rates are expected to rise when the Fed stops the purchase of these mortgage-backed securities in 2022.5

Though rates are on the rise, Neat Loans offers a variety of programs to find the right rate for you. Check out today’s rates on our website.

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THANKS FOR READING! PLEASE NOTE THAT THIS CONTENT IS INTENDED FOR EDUCATIONAL PURPOSES ONLY. AS LAWS AND LENDER REQUIREMENTS CHANGE REGULARLY, YOU SHOULD SPEAK TO A HOME LOAN ADVISOR ABOUT YOUR PARTICULAR SITUATION. IF YOU’RE INTERESTED IN PURCHASING OR REFINANCING A HOME,  CHECK OUT TODAY'S MORTGAGE RATES OR GET PRE-APPROVED IN THREE MINUTES.