Mortgage interest rate predictions: Will rates go down in November 2022?

Will mortgage rates go down in November?

Mortgage rates fluctuated greatly in the third quarter of 2022. The average 30-year fixed rate dipped as low as 4.99% on Aug. 4 then reached a high-water mark of 6.7% on Sept. 29, according to Freddie Mac.

This followed 248 basis points (2.48%) of growth in the year’s first half. Rates varied from one week to the next as the Fed wrestled with inflation. Mortgage rates experienced the largest weekly jump since 1987, surging 55 basis points (0.55%) the day after the Federal Reserve’s June hike.

With the pandemic’s declining economic impact, decades-high inflation, and the Fed planning several more aggressive hikes, interest rates could continue trending upward this year. However, concerns about an impending recession and waning buyer demand have caused rate drops and could cause more on any given week.

Experts from Attom Data Solutions, CoreLogic, First American, and the National Association of Realtors weigh in on whether 30-year mortgage rates will climb, fall or level off in November.

“Ultimately, the risk is that rates will stay high and could trend even higher until we see sustained evidence that inflation is receding.”

–Odeta Kushi, deputy chief economist at First American

Expert mortgage rate predictions for November

Nadia Evangelou, senior economist & director of forecasting at the National Association of Realtors

Prediction: Rates will rise

“Mortgage rates will move up closer to 7.5% in November. Even though inflation has slightly eased, [it] remains elevated. In the meantime, rent prices — accounting for 40% of the consumer price index — will continue to climb as people may need to rent for longer due to historically low affordability.

Fifteen percent fewer renters can afford to buy the median-priced home compared to a year ago. With the Federal Reserve raising further interest rates next month, home borrowing costs will continue to increase.”

Selma Hepp, deputy chief economist at Corelogic

Prediction: Rates will rise

“Mortgage rate trajectory highly depends on the upcoming jobs and inflation reports which will impact the Fed’s further hike decisions. As home price gains and rent growth over the last year increasingly contribute to core inflation, it appears that both core inflation and in particular, shelter inflation, will continue to inch up.

On the other hand, the jobs report may start to show some weakness in hiring, which is what the Fed is looking for in order to taper down rate hikes. Nevertheless, the Fed’s resolve to bring down inflation and the corresponding likelihood that it will cause a recession continues to weigh on mortgage investors asking increasingly more for their risk, which will likely drive mortgage rates up further.”

Odeta Kushi, deputy chief economist at First American

Prediction: Rates will rise

“Interest rates are notoriously difficult to predict, and even more so in such an uncertain economic environment. Data reports that raise inflation expectations will likely result in further upward pressure on interest rates, while those that point to moderating inflation may prompt rates to pull back.

Ultimately, the risk is that rates will stay high and could trend even higher until we see sustained evidence that inflation is receding. Recession fears also impact the path of interest rates, as heightened concerns may put downward pressure on interest rates.”

Rick Sharga, EVP of market intelligence at Attom Data Solutions

Prediction: Rates will rise

“We’re in one of the most volatile periods in memory when it comes to fluctuations in mortgage rates, so it’s difficult to predict interest rate moves with any degree of certainty. Especially short-term rates. But at the moment, rates are inextricably tied to how aggressively the Federal Reserve feels it needs to act in order to get inflation under control.

Efforts to date haven’t been very successful, so it’s likely that the Fed will continue to raise the Fed Funds rate, which will probably trigger another increase in mortgage rates. Hopefully, the market has already factored in the likely Fed actions so the increase will be minimal, and rates will stay between 7.0-7.5% for a 30-year fixed-rate loan. But there’s definitely some upside risk, and it’s not out of the question that we could see rates approach 8%.”

Find your lowest mortgage rate. Start here (Nov 7th, 2022)

 

Mortgage interest rates forecast next 90 days

With inflation running high and proving hard to control, the Federal Reserve is following an aggressive policy plan to bring it down. That’s led to an overall ramp-up of interest rates as lenders account for the Fed’s rate hikes.

Because of this, many experts currently believe mortgage interest rates will move within a tighter range in the fourth quarter compared to the large, rapid growth we saw earlier in 2022.

Of course, rate volatility could increase due to the recession’s uncertainty or repercussions of global events impacting the economy.

Mortgage rate predictions for late 2022

The average 30-year fixed-rate mortgage climbed to 6.7% at the end of September, according to Freddie Mac. Only two of the six major housing authorities we looked at project the fourth quarter’s average to finish below that.

The National Association of Home Builders and the National Association of Realtors sit at the low end of the group, estimating the average 30-year fixed interest rate will settle at 5.39% and 6.6% for Q4. Meanwhile, Fannie Mae, the Mortgage Bankers Association and Freddie Mac had the highest predictions, with forecasts of 6.7%, 6.7% and 6.8%, respectively, by the end of 2022.

 

Which mortgage loan is best?

The best mortgage for you depends on your financial situation and your goals.

For instance, if you want to buy a high–priced home and you have great credit, a jumbo loan is your best bet. Jumbo mortgages allow loan amounts above conforming loan limits, which max out at $647,200 in most parts of the U.S.

On the other hand, if you’re a veteran or service member, a VA loan is almost always the right choice. VA loans are backed by the U.S. Department of Veterans Affairs. They provide ultra-low rates and never charge private mortgage insurance (PMI). But you need an eligible service history to qualify.

Conforming loans and FHA loans (those backed by the Federal Housing Administration) are great low–down–payment options.

Conforming loans allow as little as 3% down with FICO scores starting at 620. FHA loans are even more lenient about credit; home buyers can often qualify with a score of 580 or higher, and a less–than–perfect credit history might not disqualify you.

Finally, consider a USDA loan if you want to buy or refinance real estate in a rural area. USDA loans have below-market rates — similar to VA — and reduced mortgage insurance costs. The catch? You need to live in a ‘rural’ area and have moderate or low income to be USDA–eligible.

Mortgage rate strategies for November 2022

Mortgage rates grew fast and furiously to open 2022. The pace slowed in the second quarter, then interest rates shot up again after the Fed’s 0.75% federal funds rate hikes in June, July, and September.

The central bank said it anticipates multiple similar hikes throughout 2022 and 2023 until inflation gets under control. Mortgage rates could continue climbing in response. However, opportunities to lock in a lower interest rate do still exist for home buyers and refinancing homeowners.

Here are just a few strategies to keep in mind if you’re mortgage shopping in the coming months.

Consider an ARM

The more interest rates climb this year, the more sense it makes for some borrowers to opt for an adjustable-rate mortgage (ARM).

ARMs tend to get a bad reputation for their association with the housing crash of 2008. However, just like overall underwriting became stronger, ARMs also have better protections in place now and come with certain advantages, like low introductory rates that can be fixed for three to 10 years. There’s also a common misconception that the rate can only increase when it gets adjusted. But it’s possible an adjustment could lead to a lower rate because ARMs are market-dependent at the time of adjustment.

Furthermore, ARMs come in different time frames. If borrowers plan to sell or refinance before the next 5 years for example, a 5/1-year ARM would be a great match for them. As of Oct. 20, the rate on a 5/1-year ARM was 5.71% compared to 6.94% for the 30-year fixed rate mortgage, according to Freddie Mac. Borrowers who opt for the ARM in this scenario could save hundreds on their monthly mortgage payments.

Never take the first offer

Since interest rates can vary drastically from day to day, failing to shop around likely leads to money lost.

Lenders typically have different rates they reserve for different levels of credit scores. And while there are ways to negotiate a lower mortgage rate, the easiest is to get multiple quotes from multiple lenders and leverage them against each other.

“Research has shown that many borrowers only get rate quotes from a single lender,” said Len Kiefer, deputy chief economist at Freddie Mac. “Given the recent volatility in markets, rates can shift substantially day by day. A savvy customer would be informed about market conditions and consider multiple options before opting for a lender and loan product that best meets their needs.”

As the mortgage market slows due to lessened demand, lenders will be more eager for business. While missing out on the rock-bottom rates of 2020 and 2021 may sting, there’s always a way to use the market to your advantage.

How to shop for interest rates

Rate shopping doesn’t just mean looking at the lowest rates advertised online because those aren’t available to everyone. Typically, those are offered to borrowers with great credit who can put a down payment of 20% or more.

The rate lenders actually offer depends on:

• Your credit score and credit history
• Your personal finances
• Your down payment (if buying a home)
• Your home equity (if refinancing)
• Your loan-to-value ratio (LTV)
• Your debt-to-income ratio (DTI)

To figure out what rate a lender can offer you based on those factors, you have to fill out a loan application. Lenders will check your credit and verify your income and debts, then give you a ‘real’ rate quote based on your financial situation.

You should get three to five of these quotes at a minimum, then compare them to find the best offer. Look for the lowest rate, but also pay attention to your annual percentage rate (APR), estimated closing costs, and ‘discount points’ — extra fees charged upfront to lower your rate.

This might sound like a lot of work. But you can shop for rates in under a day if you put your mind to it. And shaving just a few basis points off your rate can save you thousand.