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Rate Perspective
Given the recent increase in mortgage interest rates, we think a little perspective is in order.
- The average 30-year rate for the last 40+ years is 7.5%
- Rates are now back within the range where they were between April 2018 and February 2019
- Between January 2000 and December 2009, the high was 8.15% and the low was 5.05%
- Between January 1990 and December 1999, rates never went below 6.25%
Bottom line, while the increase in rates is challenging for active buyers, rates are still incredibly low historically speaking.
War and Interest Rates
Our clients are curious to know what the conflict in the Ukraine will mean for mortgage rates.
The short answer is down in the near term and up in the long term.
Generally speaking, economic and political uncertainty drive people to invest in bonds rather than stocks, which puts downward pressure on interest rates.
So, in the near term, the conflict in the Ukraine will push rates down slightly. We have already seen this happen as 30-year rates have dipped in the last few days.
The conflict is likely to push oil prices up which means higher gasoline prices. This will cause upward pressure on inflation, which ultimately causes upward pressure on interest rates.
So, the longer the war lasts in Europe, the more likely it is to push interest rates even higher.
2022 Forecast
Yesterday we held the annual Real Estate Market Forecast with our Chief Economist, Matthew Gardner.
To get the recording of the full presentation, please reach out to your Windermere real estate broker.
Here are some of the big takeaways from Matthew:
- The national economy is very strong and the rate of inflation is expected to slow during 2022
- There are many millions more open jobs available versus the number of unemployed people looking for work
- Mortgage interest rates are expected to reach 3.85% by the end of the year
- Home price appreciation along the Front Range will again be in the double-digits this year due to high demand, low supply and low interest rates
- Home price appreciation is not expected to sustain the current pace over the next few years, but no price declines are expected
Rate Forecast
Here is our interest rate Forecast for the next year.
Our Chief Economist, Matthew Gardner, predicts that rates for a 30-year fixed mortgage will stay between 3.8% and 3.9% for 2020.
He doesn’t see rates going above 4.0% until at least the first quarter of 2021.
This is obviously great news for buyers as their payments will stay much lower as compared to having a rate at the long-term average of 7.5%.
If you would like to see the slides from Matthew Gardner’s Forecast presentation, we would be happy to get those in your hands. Just let us know if we can help!
