Rob Carlson
Mortgage Director
rob.carlson@border.bank
701-532-3650
 

With record low rates and high demand in housing, it was another historic year in the mortgage industry in 2021.
 
What does that mean for 2022?
High inflation could be around longer than economists were projecting.  To rein in inflation, the Federal Reserve will raise interest rates, which will raise mortgage interest rates.

The question is how far up will they go?
The Mortgage Bankers Association (MBA) is forecasting the average 30-year fixed rate will hit 3.7% by the third quarter of 2022, and 4% by the end of 2022. That would be a big increase from the current average rate of 3.125%. Fannie Mae is projecting 3.4% by the end of 2022. As you can see, there is a little bit of a difference depending on which economist you ask but a good bet would be rates will be between 3.4% and 4% by the end of 2022 on a 30-year fixed rate.
 
The next question people ask is what are home prices going to do in 2022?
The MBA is projecting the median price of an existing home in the first quarter of 2022 to go up 15.3% from the first quarter of 2021. That average price would be $362,000,  but it does also project home prices dropping by the end of 2022, with the average price falling to $352,000 by the end of 2022 - a price drop of 2.5% for the year. 

The crazy part of all this is Zillow is predicting a 13.6% price increase, Fannie Mae is predicting a 7.9% increase, and CoreLogic is predicting a 1.9% increase. 

As you can see, the economists are all over the map as to what home prices are going to do in 2022. 
I would say in the markets we are in - Northern Minnesota, Fargo, and Minneapolis -  we will see a bit of an increase in prices. I do not see a 13% increase;  but I agree with CoreLogic’s prediction of around a 1.9% increase. 
 
2022 should lead to a stabilization of home prices and slight increase in rates. Refinancing will not be as prevalent in 2022 but there is going to be a strong demand with people looking to purchase homes. Border Bank is very excited about 2022 and helping as many people as we can purchase homes or use the equity in their home to fix it up.