{"id":32618,"date":"2022-08-19T17:13:22","date_gmt":"2022-08-20T00:13:22","guid":{"rendered":"https:\/\/www.homelight.com\/blog\/?p=32618"},"modified":"2026-04-16T00:43:27","modified_gmt":"2026-04-16T07:43:27","slug":"how-high-will-mortgage-rates-go","status":"publish","type":"post","link":"https:\/\/www.homelight.com\/blog\/how-high-will-mortgage-rates-go\/","title":{"rendered":"How High Will Mortgage Rates Go? See What Experts Are Saying"},"content":{"rendered":"

The U.S. housing market is undergoing a rebalancing. Visit\u00a0HomeLight’s 2022 Housing Trends Hub<\/a>\u00a0for information on how to navigate a shifting market \u2014 whether you’re a seller, buyer, or homeowner.<\/em><\/p>\n

Mortgage interest rates have been on a wild ride so far this year<\/a>. In January, home buyers were locking in 30-year mortgages at 3.29%. Fast forward a few months, and the rate increased to between 5% and 6%.<\/p>\n

Whether you\u2019re looking to buy, sell or refinance your home, these rates could have a significant impact on your future plans. If you\u2019re asking yourself how high mortgage rates will go, here is what you need to know about the current state of the real estate market<\/a> \u2014 and why the rising rates may not be quite as scary<\/a> as they may seem.<\/p>\n

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Who sets mortgage interest rates?<\/h2>\n

In July, the U.S. Federal Reserve made its fourth consecutive interest rate hike<\/a> of 2022. These benchmark interest rate hikes make borrowing money more expensive for consumers and banks. With banks paying more interest on the money they lend each other, they\u2019re forced to increase the costs of their products and services to stay profitable \u2014 including mortgage rates<\/a>.<\/p>\n

So while the Fed doesn\u2019t set mortgage interest rates, changes they make to the benchmark rate do loosely impact them. Other factors that come into play include the overall state of the economy and the bond market.<\/p>\n

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What\u2019s causing mortgage interest rates to increase?<\/h2>\n

The key reason the Federal Reserve has increased interest rates so much is to fight inflation<\/a>, which reached a 40-year high in June<\/a>. The rate of inflation not only makes things more expensive for consumers, but for businesses, as well. As we mentioned earlier, raising mortgage interest rates<\/a> is one way banks offset these rising costs so that they can continue to stay profitable.<\/p>\n

\u201cThere\u2019s a lot of tension built into interest rates right now,\u201d says Martin Orefice<\/a>, CEO of Rent to Own Labs. \u201cThe Fed\u2019s rate hikes are pushing interest rates up even as demand for homes remains high. People are eager to sell while the market is still hot.\u201d<\/p>\n

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How high will mortgage rates go?<\/h2>\n

Although mortgage interest rates rose rapidly this year, it\u2019s important to consider that those increases occurred in anticipation of Federal rate hikes. According to Bill Ryze, a certified Chartered Financial Consultant (ChFC) and board advisor at Fiona<\/a>, this indicates mortgage rates won\u2019t continue climbing as they did early in 2022. \u201cThe mortgage rates will continue rising but at a slower rate since the rates have already been priced into the effects of the Fed rate hikes,\u201d he says.<\/p>\n

Dustin Holmberg<\/a>, VP of Lending for Clearview Federal Credit Union<\/a> says, \u201cWhat I would anticipate is that rates will level off for the rest of the year. There\u2019s still potential for an upside surprise, but many of the long-term, forward-looking indexes suggest we\u2019ve hit a moderation point.\u201d<\/p>\n

And while interest rates do seem high when compared to two years ago, mortgage and real estate experts agree that it\u2019s all about perspective. \u201cWe\u2019re still towards the lower end of where mortgage rates have been historically over the last 40 years,\u201d Holmberg says.<\/p>\n

\u201cWhen the rates were 2.8% it was like free money,\u201d says Kathryn Townsend<\/a>, Maine real estate agent and owner of Townsend Real Estate. \u201cI don\u2019t know that we\u2019ll ever see that in the near future again.\u201d<\/p>\n

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Mortgage rate trends 1974-2021<\/h2>\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n\n
Year<\/b><\/td>\nAverage 30-year rate<\/b><\/td>\nYear<\/b><\/td>\nAverage 30-year rate<\/b><\/td>\nYear<\/b><\/td>\nAverage 30-year rate<\/b><\/td>\nYear<\/b><\/td>\nAverage 30-year rate<\/b><\/td>\n<\/tr>\n
1974<\/b><\/td>\n9.19%<\/td>\n1986<\/b><\/td>\n10.19%<\/td>\n1998<\/b><\/td>\n6.94%<\/td>\n2010<\/b><\/td>\n4.69%<\/td>\n<\/tr>\n
1975<\/b><\/td>\n9.05%<\/td>\n1987<\/b><\/td>\n10.21%<\/td>\n1999<\/b><\/td>\n7.44%<\/td>\n2011<\/b><\/td>\n4.45%<\/td>\n<\/tr>\n
1976<\/b><\/td>\n8.87%<\/td>\n1988<\/b><\/td>\n10.34%<\/td>\n2000<\/b><\/td>\n8.05%<\/td>\n2012<\/b><\/td>\n3.66%<\/td>\n<\/tr>\n
1977<\/b><\/td>\n8.85%<\/td>\n1989<\/b><\/td>\n10.32%<\/td>\n2001<\/b><\/td>\n6.97%<\/td>\n2013<\/b><\/td>\n3.98%<\/td>\n<\/tr>\n
1978<\/b><\/td>\n9.64%<\/td>\n1990<\/b><\/td>\n10.13%<\/td>\n2002<\/b><\/td>\n6.54%<\/td>\n2014<\/b><\/td>\n4.17%<\/td>\n<\/tr>\n
1979<\/b><\/td>\n11.20%<\/td>\n1991<\/b><\/td>\n9.25%<\/td>\n2003<\/b><\/td>\n5.83%<\/td>\n2015<\/b><\/td>\n3.85%<\/td>\n<\/tr>\n
1980<\/b><\/td>\n13.74%<\/td>\n1992<\/b><\/td>\n8.39%<\/td>\n2004<\/b><\/td>\n5.84%<\/td>\n2016<\/b><\/td>\n3.65%<\/td>\n<\/tr>\n
1981*<\/b><\/td>\n16.63%<\/td>\n1993<\/b><\/td>\n7.31%<\/td>\n2005<\/b><\/td>\n5.87%<\/td>\n2017<\/b><\/td>\n3.99%<\/td>\n<\/tr>\n
1982<\/b><\/td>\n16.04%<\/td>\n1994<\/b><\/td>\n8.38%<\/td>\n2006<\/b><\/td>\n6.41%<\/td>\n2018<\/b><\/td>\n4.54%<\/td>\n<\/tr>\n
1983<\/b><\/td>\n13.24%<\/td>\n1995<\/b><\/td>\n7.93%<\/td>\n2007<\/b><\/td>\n6.34%<\/td>\n2019<\/b><\/td>\n3.94%<\/td>\n<\/tr>\n
1984<\/b><\/td>\n13.88%<\/td>\n1996<\/b><\/td>\n7.81%<\/td>\n2008<\/b><\/td>\n6.03%<\/td>\n2020<\/b><\/td>\n3.10%<\/td>\n<\/tr>\n
1985<\/b><\/td>\n12.43%<\/td>\n1997<\/b><\/td>\n7.60%<\/td>\n2009<\/b><\/td>\n5.04%<\/td>\n2021<\/b><\/td>\n2.96%<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n

*Note of interest: While the 1981 average was 16.63%, interest rates peaked at 18.45% in October of 1981.<\/em> Source: <\/i>Freddie Mac<\/i><\/a><\/p>\n

\n It\u2019s<\/span> been important to educate sellers that as interest rates rise, they have to come in with a more modest list price. Buyers are being more conservative, which means prices are going down.<\/span><\/b><\/q>\n
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