Projecting the ups and downs of mortgage rates can be a chore, but it is an important one to take on since the implications for home buyers are so significant.
Plan ahead and you could keep your repayments to a minimum, but mistime it even a little and your costs could spiral.
So after a year of record lows, where are rates headed in 2022 and what factors are likely to influence the market going forward?
Rises on the horizon
Mortgage rates tend to fluctuate fairly regularly, with economic and political pressures impacting the averages, and the personal financial circumstances of individual applicants also holding sway over how much needs to be paid to maintain a home loan.
This is why you should use MoneyWise to compare rates to get the best deal, even if typical packages at the moment remain amenable to borrowers in most cases.
Even so, industry insiders are predicting that a rise in rates over the course of 2022 will catalyze a corresponding drop in the number of people applying to refinance, even if the actual number of mortgages created continues to increase.
This is all according to the Mortgage Bankers Association, which in its most recent report said that rates on a 30 year fixed loan could creep up to 4% next year.
You can appreciate that with this anticipated uptick in the cost of getting one of the most popular mortgage packages, homeowners will be hesitant to switch from their existing loan products.
So what is causing this pessimism? Well, the economic recovery post-pandemic may have been a noteworthy feature of 2021 so far, but it has been hampered by ongoing issues with the supply chain, which in turn has led to spiraling costs for certain essential products, and muted consumer spending.
You could argue that this backswing from the unique circumstances created by the COVID-19 crisis was inevitable, but it nevertheless indicates that housing costs will creep higher and demand will shift in 2022 and beyond.
Reasons to be cheerful
It is worth noting that while mortgage rates do seem set to increase next year, opinions on the exact extent of this rise do differ, and 4% seems to be among the more pessimistic predictions.
Some expert analysts think the rise for a 30 year fixed rate home loan could be closer to 3.5% at most, while others peg this at around 3.7%.
Whatever the case, this means that there could still be attractive packages on the table in 2022, so there is not necessarily a need to rush and lock in deals right now, especially if you are not quite in the strongest position to do so at the moment.
Another point to consider in all of this is that even with 4% rates predicted to return, this would still leave the mortgage market in a more affordable state than it has been for some time.
Analysis of historic rates reveals that we are still on a downward trajectory, and that even as recently as 2015 people were paying more than 4% interest on home loans.
It is a small mercy for first-time buyers in the modern market that while house prices in plenty of regions have never been higher, the interest charged against eye-watering loans is still far lower than in previous generations.
The only way for mortgage rates to remain stable is for the wider societal circumstances to keep consistent. All you need to do is avoid making snap decisions and consider all your options, especially when so much money is on the line.