All About Mortgage Rates: Where They Are And Where They Are Headed

If you’re thinking of buying or selling a home, current and future mortgage rates can play a big factor in matters of market timing, home pricing, and housing supply and demand. Here’s the latest bird’s-eye view of the latest mortgage rate trends and what this could mean for you as consider entering today’s real estate market.

Current Mortgage Rates

The Freddie Mac Mortgage Market Survey is a compilation of weekly mortgage rate survey data from the gamut of home lenders, including commercial banks, credit unions, mortgage lending companies, and thrifts. According to the latest survey, as of the week of June 9, 2022, the average current mortgage rates are as follows: (Note the FRM stands for a fixed-rate mortgage and ARM stands for an adjustable-rate mortgage.)

• 30-yr FRM - 5.23 percent average rate with 0.9 fees and points
• 15-yr FRM - 4.38 percent average rate with 0.8 fees and points
• 5/1-yr ARM - 4.12 percent average rate with 0.3 fees and points and 2.75 margin

This marks an increase of 1.01 percent in the average 30-yr FRM since its average rate of 3.22 percent at the start of the year. Compare this to all of 2021, in which mortgage rates volleyed between 2.74 percent and 3.08 percent, a range of 0.34.

Future Mortgage Rate Projections

In early 2022, Freddie Mac predicted a 3.6-percent average rate for 30-yr FRM, while, six months later, as of early June, the prediction has nudged up 0.2 percent to 3.8 percent.

As the data above shows, rates have already surpassed that prediction. They’ve also surpassed Fannie Mae’s projections of 3.5 percent for the first quarter of 2022 and 3.6 percent for the rest of the year, and the Mortgage Bankers Association’s predictions of, respectively, 3.3 percent and 4 percent for the same periods.

As 2021 demonstrated, however, rates don’t always move in a single direction over the year. They can reach their peak anytime mid-year and still decline from there. So, there's the possibility rates can decline back toward that predicted mean over the year as well.

In an early-March piece in Bankrate, some mortgage experts gave their two cents (or two points?) on the direction rates may be headed in the near-to-mid term. The prevailing opinion among them was that mortgage rates will continue to rise in the short term, in part due to a confluence of volatile factors, like inflationary worries and geopolitical conflict.

So, while greater sanctions against Russia for its invasion of Ukraine could give mortgage rates a little relief, the near-inevitability of the Fed raising short-term interest rates again foretells another bump up for mortgage rates as a consequence. As the economy suffers the effects of inflation, however, lenders may start to feel the pressure to push rates down or compress margins.

All this at the same time that home prices continue to remain high. It makes now more than ever a critical time to speak with your local real estate agent to figure out your plan for moving forward in selling or buying your home.