After almost two years of ridiculously low mortgage rates, is the real estate industry in for a change as we roll into 2022? That’s the question on everyone’s mind. It doesn’t matter if you’re a buyer or seller, the low interest rates have been a welcome blessing amidst several rounds of pandemics and all sorts of other world-changing events.
Now, as we turn over the calendar, what should we expect? Will it be more of the same, or will interest rates climb their way back up? According to experts, it looks like interest rates will start to increase in 2022—and sooner rather than later!
Interest Rates Will Rise in 2022
Heading into 2022, there was speculation that interest rates would rise slightly as we got deeper into the year, but nothing was written in stone. When the latest COVID variant struck, everyone hoped it’d be enough to keep the interest rates low and stimulate the economy. However, that doesn’t seem to be the case.
According to the Federal Open Market Committee (FOMC), the Fed has decided to make its interest rate taper schedule a bit more aggressive. The chance of a rate hike as early as March has increased to 57.6% as of the first week of January 2022. In other words, it’s more likely than not we’ll see interest rates start to go skyward in just under three months.
How Much Will Interest Rates Increase?
Before everyone starts to freak out that they won’t be able to afford their next home, don’t worry; interest rates aren’t expected to increase by that much.
According to data from Bankrate, interest rates are expected to reach around 3.75% in 2022 but will likely fall back down to around 3.5% by the end of the year. While that’s certainly higher than the ridiculous sub-three percent rates we enjoyed in 2020 and 2021, it’s on par with the quite-affordable 3.7% rates we saw before the pandemic struck. Although inflation is certainly an issue right now, you don’t have to worry about anything like the inflation-driven rate hikes up into the 10% range we saw in the 1990s.
What Does that Mean for Buyers and Sellers?
Essentially, the rising interest rates mean that if you can buy a house within the next few months, do it! A rise of even a few decimal points could add hundreds to your monthly mortgage payment. And, if forecasts are correct, you can expect to see an influx of houses onto the market now that the new year is upon us. If you want to capitalize on the historic low interest rates, now is the time to do it!
However, if you’re not quite ready to make your move, don’t fret. Interest rates aren’t going to go crazy. You’ll still be able to afford that Hawaiian house of your dreams with decently low interest rates even if you decide to wait until the middle of end of the year. It might cost a bit more per month on the mortgage, but it shouldn’t send you to the poor house.
If you’re ready to make your move, or if you just want consult an expert, I’d love to help! There are plenty of properties available on the Big Island. I’ll help you find the perfect Hawaiian home to meet your needs and budget. You can also sign up for my newsletters below to keep up with the ever-changing real estate market.
Aloha, and welcome to Hawaii.