The 30-year fixed mortgage now averages 3.2 percent, indicating robust growth in demand and expectations for the year ahead, according to the National Association of Realtors and loan company Freddie Mac. The 15-year fixed rate reached 2.43 percent this week compared to 2.16 percent a year ago. Last summer the 30-year fixed rate slipped to 2.77 percent due to fears over the Covid-19 Delta variant.
“Elevated inflation and the Fed’s taper acceleration will move up mortgage rates in January. I expect the 30-year fixed mortgage rate to average 3.2 percent and the 15-year fixed mortgage rate to average 2.5 percent this month,” said NAR Director of Forecasting Nadia Evangelou. She credited the addition of 6 million jobs over the past year as a significant factor towards the increase in the mortgage rate.
The NAR forecast that rates could reach as high as 3.7% by the end of 2022. The higher rate may deter some prospective buyers, but the demand for housing will remain “robust,” the group predicted. Freddie Mac also attributed the rise to higher inflation, with only a modest impact on demand due to first-time homebuyer growth.