If you’re planning on buying a new home or refinancing your existing mortgage in May of 2022, tapping into the latest trends in the mortgage market could help you make informed decisions.  Understanding recent developments, fluctuating interest rates, the current housing market, and economic conditions may 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 compiled the latest in May mortgage market trends into this quick monthly update.

The market is always changing and interest rates are in constant flux, so when you’re ready to make a move, use our free mortgage tools and talk with a trusted home loan advisor as soon as possible. In the meantime, here’s what you need to know about mortgage market trends for May 2022.‍

How are interest rates changing in May 2022?

Mortgage rates are increasing. Since fall of 2021, the Federal Reserve has stopped purchasing mortgage backed securities. Mortgage rates have increased, and by the end of April 2022, mortgage rates were 5.375% for a 30-year fixed, 4.375% for a 15-year fixed.

The Federal Open Market Committee (FOMC) will meet again this month to discuss the next rate hike scheduled in 2022. Experts predict that rates will continue to rise through the month of May and through the entirety of 2022. The Mortgage Report determined that the reason for the drastic rise in rates was a combination of high consumer spending and inflationary pressure. With the pandemic’s declining impact, and record-high inflation, the FED is serious about enforcing these aggressive rate hikes. 

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

According to Kiplinger Economic Forecast, there are six more Federal rate hikes scheduled for 2022. These rate hikes are in place to combat the rising inflation of nearly 9%. The Fed will also enact a practice known as “quantitative tightening”where they will begin selling Treasury and mortgage backed securities from their balance sheet.

Today, inflation is at 8.54%; up from 7% last month and 1.79% from May 2019. The Fed recently confirmed that they will combat high inflation with several rate hikes and quantitative tightening. Interest rates rose steadily at several points throughout 2022 and will continue to rise in May. 

The Federal Reserve may again raise its benchmark rate in May. With the unemployment rate near record lows and inflation the highest in four decades, the Federal Reserve may take a more aggressive rate hike this time, pushing up mortgage rates further. As inflation will eventually start slowing down later this year, mortgage rates may not rise as fast as they do now.

See more from Nadia Evangelou, senior economist and director of forecasting at the National Association of Realtors.

Are homes currently more or less expensive?

Home prices have reached historical highs, and experts are uncertain when they will steady. Over the past few years, there has been a growing demand for housing, and prices have risen to record-high levels across the nation. However, despite the rise in rates, purchase activity is still strong.

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

The U.S. real estate market is still in the midst of a supply crisis; according to the Federal Reserve Economic Data, there were only 381,950 active listings in May 2022, which is down from 747,839 in 2020, and 1,310,899 in 2019. Buyers face real challenges with the low supply of available housing, making it more important than ever to go into your housing search with a strong home bidding strategy.

The hottest housing markets are returning to the city. 

Bankrate used statistics from RE/MAX and Zillow to determine the hottest real estate market moving into Summer of 2022. Determinants include where homes are selling the fastest (shortest time listed), and where prices continue to rise. Nashville, Tennessee was their hottest market, with an average 14 day listing. Seattle, Washington followed second with 17 days. Omaha and Salt Lake City tied with 18 days, and Cincinnati, Birmingham, Charlotte, Denver, Las Vegas, Manchester and San Francisco also made their list. Throughout the past 2 years, expensive cities and states lost a lot of appeal due to the ability to work from home. Now, expensive cities are getting more traction. Orlando, Florida struggled in the early days of the pandemic but is now the fastest growing market 7 months in a row, jumping 151 spots on their “hotness scale” since this time last year.  

Though rates are on the rise, you still have time to take advantage of historically low rates. Keep your eye on the market and check out today’s rates at neatloans.com. 

SOURCES:

https://themortgagereports.com/32667/mortgage-rates-forecast-fha-va-usda-conventional

https://themortgagereports.com/91353/mortgage-rates-to-rise-after-may-fed-meeting 

https://www.ubs.com/global/en/wealth-management/insights/chief-investment-office/market-insights/2019/quantitative-tightening-impact.html

https://www.npr.org/2022/05/04/1096752841/quantitative-easing-meet-quantitative-tightening 

https://denverite.com/2022/04/13/denvers-average-house-price-may-hit-1-million-by-memorial-day-says-a-colorado-realtors-group/ 

https://fred.stlouisfed.org/series/ACTLISCOUUS 

https://themortgagereports.com/91026/housing-market-inventory-peak-summer-2022 

‍https://www.bankrate.com/real-estate/days-on-market-decrease-amid-buyer-competition/ 

‍

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 at neatloans.com or get pre-approved in 3 minutes.