Where are mortgage rates headed in the coming year?

It was a wild 2021 in the U.S. housing market. As Americans gained some stability following a challenging 2020 — and with mortgage rates hitting record lows — interest in buying a home soared.

This desire to buy a home, coupled with a relatively small inventory of available properties, sent prices skyrocketing. We previously explored what this type of market means for relocating employees, and we also considered whether we were approaching “bubble” conditions. And as we noted a few months ago, things did start to cool down heading into the winter months — sort of.

Looking ahead to 2022, a key question is, “What will happen with mortgage rates?” The historically low rates we saw in 2020 and 2021 played a critical role in setting the stage for the buying frenzy, as interested homebuyers wanted to strike while the iron was hot.

In the article below, market experts lay out three potential scenarios for 2022:

• Rates stay steady
• Rates rise slowly
• Rates are volatile (ups and downs throughout the year)

The good news for potential buyers is that a sharp increase doesn’t seem to be in the cards, so there should be some time in the coming year to take advantage of rates that are well below historical averages.

We’ll get a better sense of what the 2022 housing market will look like as we hit the spring months, when activity typically starts to pick up. While prices might not soar as wildly as they did in 2021, they are still expected to go up next year, and inventory likely won’t catch up with demand — meaning sellers should remain in a favorable position. What happens with mortgage rates will likely determine just how determined buyers become.