10-Jan-22 – Chicago-area home buyers will pay more for mortgages in the new year, analysts predict.

On January 6, Freddie Mac’s Primary Mortgage Market Survey reported that benchmark 30-year fixed-rate mortgages averaged 3.22 percent, up from 3.11 percent a week earlier. A year ago, the 30-year fixed loan averaged 2.65 percent.

Fifteen-year fixed-rate mortgages averaged 2.43 percent on January 6, up from 2.33 percent a week earlier. A year ago, 15-year fixed loans averaged 2.16 percent.

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 in January 2021, according to 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,” said Khater (left). “The impact of higher rates on purchase demand remains modest so far, given the current first-time home-buyer growth.”

The Freddie Mac survey is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who place a 20 percent down payment and have excellent credit.

On December 15, 2021, the Federal Reserve said it is shifting from a relaxed monetary policy, that has supported the economic rebound from the 2020 pandemic recession, toward a tighter policy.

Forecasters predict that the federal funds target rate will likely undergo three 25-basis-point interest hikes in 2022, and three more similar increases in 2023.

This implied tightening would push the 10-year Treasury rate – the gauge economists use to forecast 30-year-fixed mortgage interest charges – to 2 percent from the current 1.73 percent. The key rate was 1.66 percent only two weeks ago.

Thirty-year fixed-mortgage interest rates ended 2020 at a rock-bottom 2.66 percent, the lowest level in the Freddie Mac survey history, which began in 1971. Home loan rates set new record lows for an amazing 16 times in 2020, and tens of thousands of homeowners refinanced.

However, Chicago-area borrowers who move quickly still have a chance to lock in the following bargain rates as of January 7, reports RateSeeker.com.

• First Savings Bank of Hegewisch was quoting 2.684 percent on a 30-year loan and 2.1 percent on a 15-year loan with a 20 percent down payment and a $570 loan fee.

• Gateway Capital Mortgage in Chicago was quoting 2.76 percent on 30-year loans and 2.125 percent on 15-year mortgages with a 3 percent down payment and a $595 loan fee.