Mortgage rates have taken a big leap at the start of the new year. In the first week of 2022, the 30-year fixed-rate mortgage jumped nearly 60 basis points higher than a year earlier, averaging 3.22% this week, Freddie Mac reports.

“Mortgage rates increased during the first week of 2022 to the highest level since May 2020 and are more than half a percent higher than January 2021,” says Sam Khater, Freddie Mac’s chief economist. “With higher inflation, promising economic growth, and a tight labor market, we expect rates will continue to rise. The impact of higher rates on purchase demand remains modest so far given the current first-time home buyer growth.”

The National Association of REALTORS® forecasts that mortgage rates will average 3.7% by the end of this year.

Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 6:

• 30-year fixed-rate mortgages: averaged 3.22%, with an average 0.7 point, increasing from last week’s 3.11% average. Last year at this time, 30-year rates averaged 2.65%.
• 15-year fixed-rate mortgages: averaged 2.43%, with an average 0.6 point, increasing from last week’s 2.33% average. A year ago, 15-year rates averaged 2.16%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.41%, with an average 0.5 point, unchanged from last week. A year ago, 5-year ARMs averaged 2.75%.

Freddie Mac reports average commitment rates along with average points to better reflect the total upfront cost of obtaining the mortgage.

National Association of REALTORS®
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The real estate industry is closely watching the so-called “Great Resignation,” a movement that started with the pandemic in which people are leaving the workforce in historically higher numbers. As more Americans quit their jobs, will they set out for greener pastures by moving to a new location?

The trend is only growing: In November, 4.5 million Americans left their jobs, pushing the nation’s resignation rate to a record high of 3%, MarketWatch reports. Some of the resignations have come as employers look to bring their workers back to the office after more than a year of remote work. About four in 10 workers say they’d look for a new job if their employer makes them come into the office five days a week, according to a survey of more than 2,300 people by University of Chicago researchers.

“ ‘Help wanted’ signs seem to be everywhere, as there are 10.6 million job openings. That is much higher than the figures for unemployed Americans in search of a job, at 6.3 million,” says Lawrence Yun, chief economist at the National Association of REALTORS®. “The wage rate is showing an accelerating trend, with a 6% annualized gain in the fourth quarter of last year, up from 5% in the third quarter and 2% to 3% before the onset of the pandemic. Higher wages could feed into higher consumer price inflation, which, in turn, will lead to higher mortgage rates because lenders need to compensate for the loss in value of the purchasing power of money.”

More Americans may be feeling less tethered to a certain location. About 41% of employed Americans say they’d be willing to take a pay cut or accept a new job with a lower salary in order to move to a more affordable location, according to the latest consumer survey from Coldwell Banker. Younger people appear more willing to move than older workers: The Coldwell Banker survey found that respondents ages 18 to 44 are more likely than those ages 45 to 54 to be willing to accept a lower income in order to move to a more affordable location.

Miami, Atlanta, and Austin, Texas, have emerged as top locations where Americans say they’d like to relocate once they resign from their jobs, the survey found.

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House hunters are watching mortgage rates closely. After all, every increase could have an impact on affordability, particularly given escalating home prices.

Nearly half—47%—of home buyers recently surveyed say they would feel more pressure to buy a home if mortgage rates passed 3.5%, according to a new consumer survey conducted by Redfin.

Mortgage rates are largely forecast to continue to rise over the coming months. Last week, the 30-year fixed-rate mortgage rose to its highest average since May 2020, averaging 3.22%, Freddie Mac reports. The National Association of REALTORS® forecasts that mortgage rates will average 3.7% by the end of this year.

Buyers who were surveyed say that increases in mortgage rates would also have an impact on the type of home they decide to purchase. Twenty-nine percent of buyers say that if mortgage rates increase above 3.5%, they will change their target areas to buy a home and seek a smaller one.

Only 7% of the 1,500 home buyers surveyed say they wouldn’t change their plans at all if mortgage rates rise above 3.5%, the Redfin survey shows. Only 2% would cancel their plans to purchase a home altogether if rates increase past that amount.

“Mortgage rates increasing will make homebuying less affordable,” says Daryl Fairweather, Redfin’s chief economist. “Over time, that will put the brakes on demand and put an end to double-digit annual price growth. But in the short term, this increase will light a fire under home buyers and make for an extremely competitive January.”

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he housing market doesn’t appear to be following its typical seasonal slowdown this winter. Home buyers appeared in a rush last week, with economists crediting rising mortgage rates.

Mortgage rates moved to their highest level in more than a year, the Mortgage Bankers Association reports. Buyers who are already facing higher home prices are watching mortgage rates closely as they affect what shoppers can afford.

Mortgage purchase loan applications increased 2% last week compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Purchase applications, however, are 17% lower than the same week a year ago, but real estate pros say that is primarily due to low inventories of homes for sale. They reported to CNBC anecdotally higher-than-normal activity in early January from home shoppers.

The MBA reports that the average contract interest rate for a 30-year fixed-rate mortgage for conforming loan balances rose to 3.52%, up from 3.33% the previous week. That marks the highest contract rate since March 2020.

“Mortgage rates increased significantly across all loan types last week as the Federal Reserve’s signaling of tighter policy ahead pushed U.S. Treasury yields higher,” says Joel Kan, an MBA economist. “The housing market started 2022 on a strong note. Both conventional and government purchase applications showed increases, with FHA purchase applications increasing almost 9%, and VA applications increasing more than 5%.”

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Inflation continues to press on mortgage rates. The 30-year fixed-rate mortgage averaged 3.45% this week, up from last week’s 3.22% average, Freddie Mac reports.

“Mortgage rates rose across all mortgage loan types, with the 30-year fixed-rate mortgage increasing by almost a quarter of a percent from last week,” says Sam Khater, Freddie Mac’s chief economist. “This was driven by the prospect of a faster than expected tightening of monetary policy in response to continued inflation exacerbated by uncertainty in labor and supply chains. The rise in mortgage rates so far this year has not yet affected purchase demand, but given the fast pace of home price growth, it will likely dampen demand in the near future.”

Despite rising mortgage rates, owning a home remains more affordable than renting, the National Association of REALTORS® reports. The monthly mortgage for owning a median-priced home is $1,260 compared to the average rent of $1,540, NAR notes on its Economists’ Outlook blog.

Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 13:

• 30-year fixed-rate mortgages: averaged 3.45%, with an average 0.7 points, rising from last week’s 3.22% average. Last year at this time, 30-year rates averaged 2.79%.
• 15-year fixed-rate mortgages: averaged 2.62, with an average 0.7 points, increasing from last week’s 2.43% average. A year ago, 15-year rates averaged 2.23%.
• 5-year hybrid adjustable-rate mortgages: averaged 2.57%, with an average 0.3 points, rising from last week’s 2.41% average. A year ago, 5-year ARMs averaged 3.12%.

Freddie Mac reports average points along with commitment rates to better reflect the total upfront cost of obtaining the mortgage.

National Association of REALTORS®
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Mortgage credit availability loosened in December, even as house hunters continue to face higher prices that are hampering affordability, according to the Mortgage Bankers Association.

MBA’s Mortgage Credit Availability Index posted its highest reading since May 2021. However, credit availability is still 30% below pre-pandemic levels.

“Credit supply increased in December, with growth across both conventional and government segments of the market,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a news release. “December’s growth was driven by more ARM and lower credit score loan programs, which was likely due to a combination of the rising rate environment and affordability challenges. Lenders expanded offerings to qualified borrowers who were the most impacted by these market conditions. Additionally, there was an increase in government streamline refinance programs to aid borrowers still looking to refinance before rates rise even more.”

The MBA report also notes a 34% increase in jumbo credit availability.

Home prices continue to rise. The median existing-home price for all housing types in November was $353,900, up 13.9% compared to a year earlier, the National Association of REALTORS® reports.

As home prices press higher, so is the amount that home buyers are borrowing to pay for a house. The average amount borrowed to finance a home purchase climbed to $414,115 in November, according to MBA.

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