What is happening with Interest Rates in 2022?
The Federal Reserve has stated that they are going to raise rates. What does that mean? How does what the Federal Reserve says affect Mortgage rates and what can you expect from Mortgage rates moving forward?
Looking at the relationship between the mortgage rates and the 10-year Treasury Yield over the last 50 years, the 10-year treasury rate heavily influences the 30-year mortgage rate. They basically mirror and match each other. The FED is going to raise the 10-year treasury yield up to 5 times this year which means the 30-year mortgage rate is going to increase along with it. That is why the FED's saying the mortgage rates will rise.
Mortgages will continue to rise, inflation will continue to happen so now is the time to purchase. If you've been thinking about it, if you've been thinking about getting from one house into another, you want to lock in your low rate on your next house because real estate is the number one hedge for inflation. Purchase that next house earlier rather than later to make sure to get the lowest possible rate because they are going up and by the end of the year they will be significantly higher than they are now.
If you're a first-time homebuyer, you want to make sure to purchase something because rents rise faster than inflation. Home prices rise with inflation, rents rise with inflation, but mortgage payments stay the same. So you do want to purchase your home now because prices are going up and interest rates are going up.