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

Paul Centopani
Paul Centopani
The Mortgage Reports Editor
January 27, 2022 - 16 min read

Mortgage rate forecast for next week (Feb. 7-11)

Mortgage rates surged through the beginning of 2022 and show no signs of stopping.

After settling at a 3.05% average on December 23, 2021, 30–year fixed interest rates grew significantly in the five weeks since and averaged 3.55% on January 27, 2022 – the highest range since March 2020.

With the Federal Reserve tightening its monetary policies to offset inflation, that growth will likely continue in February.

Find your lowest mortgage rate. Start here (Jan 27th, 2022)


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>Related: Cash–out refinance: Best uses for your home equity

Will mortgage rates go down in February?

Mortgage rates greatly expanded in January and indicators point to more growth for February.

Between high inflation, Fed policy changes, and the dwindling impact of Omicron, industry experts are in near–consensus that rates will rise – with high–end predictions that they could spike by as much as 100 basis points (a full percentage point) in the next few months.

Doug Duncan, Fannie Mae chief economist and senior vice president

Prediction: Rates will rise

“What precipitated this significant run up in the mortgage rates was the release of the minutes of the Fed. The market was not prepared for the statement that they would start to aggressively run the MBS portfolio off and the potential to move Fed Funds targets forward.

That started some movements in mortgage spreads. It also started some movements in rates. There are historical precedents to this. In 2013 the chair of the Federal Reserve made a speech saying it would stop buying securities at some point. Mortgage rates ran up 100 basis points in the following six months.

The Fed tightened again in the 2017–2018 time period and started raising the Fed Funds rate and running the portfolio off. Mortgage rates ran up 100 basis points over the course of a year. What we should expect is if interest rates continue to rise at the pace they are, that would suggest a rise of 100 basis points in three months.

If the Fed really does start running out its portfolio mid–year, then I think there is a reason to believe that rates rise.

Nadia Evangelou, National Association of Realtors senior economist and director of forecasting

Prediction: Rates will rise

“Mortgage rates will continue to rise in February. Inflation will remain elevated as the Fed won’t likely raise interest rates in the next couple of months.

Remember that when inflation rises, lenders demand higher interest rates as compensation for the decrease in purchasing power. Thus, I expect the 30–year fixed mortgage rate to average 3.5% in February.”

Selma Hepp, CoreLogic Deputy Chief Economist

Prediction: Rates will stay flat

Mortgage rates have already jumped about 50 bps since the beginning of the year as markets respond to Fed’s signals of upcoming lift off in rates. With Fed rate hikes already priced into yields, mortgage rates are likely to remain flat in February.

In addition, higher interest rates have not deterred home buyers or homebuilder sentiment, which is close to record levels – another reason that may keep rates where they are.

Joel Kan, Mortgage Bankers Association associate vice president of economic and industry forecasting

Prediction: Rates will rise

“Our forecast is for the 30–year fixed rate to gradually increase over the course of the year, reaching 4.0% in Q4 2022.

Another year of strong economic growth combined with the Fed’s tighter policy stance will put upward pressure on rates, and as the Fed reduces its MBS purchases, we also expect some volatility as other investors step into the market but without the steady purchase flow of the Fed.”

Odeta Kushi, First American deputy chief economist 

Prediction: Rates will rise

“Multiple factors point to continued upward pressure on mortgage rates in February. The Federal Reserve has signaled that the end of the easy money era is near. Fed tightening, in combination with a growing economy, is likely to translate to a gradual rise in mortgage rates.

Of course, the pandemic remains in the driver’s seat, and any resurgence of COVID, or any other economic, market, or geopolitical shock, could result in downward pressure on rates.”

Taylor Marr, Redfin deputy chief economist

Prediction: Rates will rise

“Rates are volatile and uncertain right now, but there is a significantly higher probability that rates will still increase through February rather than decrease, albeit only slightly. Meaning, there is more risk that mortgage rates will continue slowly rising vs falling.

I expect that the mortgage rate growth in January was reflective of investors adjusting to several factors. Examples are clarity over Omicron’s economic impact (which was uncertain through December), and increased certainty over the Fed tightening monetary policy to tame inflation.

This included a runoff of Mortgage Backed Securities on their balance sheet, which simply means that the Fed will pull back demand for mortgages–lowering prices and raising market rates.

Finally, mortgage rates follow closely the yield on 10–year treasuries, which are also heavily influenced by foreign yields and central bank behavior in countries such as Japan, Canada and Germany, and nearly all are engaging in tighter monetary policy.”

Todd Teta, Attom Data Solutions chief technology and product officer

Prediction: Rates will rise

“Home–mortgage rates look like they are headed up based on recent indicators from the Federal Reserve Bank, which point toward pulling back on economic stimulus and increasing interest rates as a way to try to head off rising inflation.

If the Fed boosts rates, that will result in mortgage rates going up. How much they increase is something we are watching closely, but it seems like some kind of increase will show up by February.”

Get started shopping for mortgage rates (Jan 27th, 2022)

Mortgage interest rates forecast next 90 days

Barring the pandemic bringing the economy to a halt, it’s very probable mortgage rates will rise over the upcoming three months.

Of course, interest rates rarely move in a straight line and can rise or drop from one week to the next. So while the overall averages should continue to climb, it’s highly likely we see some sideways and downward movements mixed in along the way.

Mortgage rate prediction chart showing rate forecasts for the next 90-days. Chart shows rates going as high as 3.75 percent by April.

Mortgage rate predictions for 2022

The average 30–year fixed rate mortgage ended 2021 at 3.10%, according to Freddie Mac.

All six of the major housing authorities we gathered expect that average to rise over the first quarter of 2022.

Fannie Mae and S&P Global sit at the low end of the spectrum, estimating the average 30–year fixed interest rate to settle at 3.20% by the end of Q1. Wells Fargo and Freddie Mac had the highest predictions, with forecasts of 3.35% and 3.50%, respectively, by the end of March.

Housing Authority30-Year Mortgage Rate Forecast (Q1 2022)
Fannie Mae3.20%
S&P Global3.20%
National Association of Realtors3.30%
Mortgage Bankers Association3.30%
Wells Fargo3.35%
Freddie Mac3.50%
Average Prediction3.31%
Chart showing mortgage rate forecasts for the first quarter of 2022. Chart shows rates could go as high as 3.5 percent on average.

Mortgage rates went through a growth spurt to kick off 2022.

Though last week (Jan. 27) the average 30–year fixed rate slightly decreased from 3.56% to 3.55%, according to Freddie Mac’s weekly rate survey.

The past five weeks accounted for a growth of 50 basis points and saw the average climb to the highest level since 3.65% on March 19, 2020.

The 15–year fixed rates showcased similar hikes, most recently inching up from 2.79% to 2.80%, while the average rate for a 5/1 ARM jumped from 2.60% to 2.70%.

MonthAverage 30-Year Fixed Rate
January 20212.74%
February 20212.81%
March 20213.08%
April 20213.06%
May 20212.96%
June 20212.98%
July 20212.87%
August 20212.84%
September 20212.90%
October 20213.07%
November 20213.07%
December 20213.10%

Source: Freddie Mac

Mortgage rates are moving away from the record–low territory seen in 2020 and 2021.

But keep in mind that rates are still ultra–low from a historical perspective.

Just three years ago, in December 2018, 30–year rates averaged 4.75% according to Freddie Mac’s survey. And in December 2019 they hovered around 3.75%.

So if you haven’t locked a rate yet, don’t lose too much sleep over it. There are still great deals to be had – especially for borrowers with strong credit.

Just make sure you shop around to find the best lender and lowest rate for your unique situation.

Many mortgage shoppers don’t realize there are different types of rates in today’s mortgage market.

But this knowledge can help home buyers and refinancing households find the best value for their situation.

Following are 3–month mortgage rate trends for the most popular types of home loans: conventional, FHA, VA, and jumbo.

December 2021November 2021October 2021
Conforming Loan Rates3.35%3.27%3.27%
FHA Loan Rates3.45%3.38%3.39%
VA Loan Rates3.02%2.96%2.96%
Jumbo Loan Rates3.23%3.24%3.19%

Source: Black Knight Originations Market Monitor Report

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 $ 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.

Find your lowest mortgage rate (Jan 27th, 2022)

Mortgage rate strategies for February 2022

Mortgage rates are rising – a trend that should continue in February and the rest of 2022. However, great opportunities to lock in a low interest rate 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 next few months.

Lock it up

If you missed out on getting a mortgage or refinancing while rates bottomed–out over the last two years, don’t let that hold you back.

Even though rates climbed back above 3%, they’re still historically low. Of course, nobody knows with 100% certainty where future rates will trend and we can only make the best decisions given what we do know today.

Current economic indicators signal more interest rate growth is on the way and industry experts forecast them to approach 4% by year’s end.

Taking all the necessary steps to get a mortgage is key to being prepared and locking in a rate when the right time comes for you.

Shop around

Competition drives innovation. In our case, competition drives lower interest rates.

As rates rise in 2022, the demand for refinancing (and to a certain extent, purchasing) will fall. This will lead to lenders having less in their pipelines and more of a need for new business.

Doing the legwork and connecting with a few different lenders can seem daunting at first but could help you shave percentage points off of your mortgage rate and save you money over the lifetime of your loan.

How to compare 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 perfect credit and 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 3–5 of these quotes at 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 mortgage 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 thousands.

Compare mortgage and refinance rates. Start here (Jan 27th, 2022)

Mortgage interest rate FAQ

What are current mortgage rates?

Current mortgage rates are averaging 3.55% for a 30–year fixed–rate loan, 2.80% for a 15–year fixed–rate loan, and 2.70% for a 5/1 adjustable–rate mortgage, according to Freddie Mac’s latest weekly rate survey. Your individual rate could be higher or lower than the average depending on your credit score, down payment, and the lender you choose to work with, among other factors.

Will mortgage rates go down next week?

Mortgage rates could decrease next week (February 7–11, 2022) depending on how the coronavirus and Omicron variant case numbers impact the economy. In all likelihood, rates should generally trend upward behind the Fed’s updated policies to combat inflation.

Will mortgage interest rates go down in 2022?

It’s unlikely mortgage rates will go down in 2022. Inflation has been climbing at a record rate over the last few months. And the Fed is planning to wind down its mortgage stimulus and raise interest rates sooner than initially expected. Both these factors should lead to significantly higher mortgage rates in 2022.

Will mortgage interest rates go up in 2022?

Yes, it’s very likely mortgage rates will increase in 2022. High inflation, a strong housing market, and policy changes by the Federal Reserve should all push rates higher in 2022. The only thing likely to push rates down would be a major resurgence in serious Covid cases and further economic shutdowns. But, while it could help mortgage rates, no one is hoping for that outcome.

What is the lowest mortgage rate right now? 

Freddie Mac is still citing average 30–year rates in the low–3 percent range. But remember that rates vary a lot by borrower. Those with perfect credit and large down payments may get below–average interest rates, while poor–credit borrowers and those with non–QM loans might see interest rates closer to 4 percent. You’ll need to get pre–approved for a mortgage to know your exact rate.

Will there be a housing crash in 2022? 

For the most part, industry experts do not expect the housing market to crash in 2022. Yes, home prices are over–inflated. But many of the risk factors that led to the 2008 crash are not present in today’s market. Low inventory and massive buyer demand should keep the market propped up next year. Plus, mortgage lending practices are much safer than they used to be. That means there’s not a sub–prime mortgage crisis waiting in the wings.

What is the lowest mortgage rate ever?

At the time of this writing, the lowest 30–year mortgage rate ever was 2.65 percent. That’s according to Freddie Mac’s Primary Mortgage Market Survey, the most widely–used benchmark for current mortgage interest rates.

Should I lock my rate now or wait?

Locking your rate is a personal decision. You should do what’s right for your situation rather than trying to time the market. If you’re buying a home, the right time to lock a rate is after you’ve secured a purchase agreement and shopped for your best mortgage deal. If you’re refinancing, you should make sure you compare offers from at least 3 to 5 lenders before locking a rate. That said, rates are rising. So the sooner you can lock in today’s market, the better.

Is now a good time to refinance? 

That depends on your situation. It’s a good time to refinance if your current mortgage rate is above market rates and you could lower your monthly mortgage payment. It might also be good to refinance if you can switch from an adjustable–rate mortgage to a low fixed–rate mortgage; refinance to get rid of FHA mortgage insurance; or switch to a short–term 10– or 15–year mortgage to pay off your loan early.

Is it worth refinancing for 1 percent? 

It’s often worth refinancing for 1 percentage point, as this can yield significant savings on your mortgage payments and total interest payments. Just make sure your refinance savings justify your closing costs. You can use a mortgage calculator or speak with a loan officer to crunch the numbers.

How do I shop for mortgage rates? 

Start by choosing a list of 3–5 mortgage lenders that you’re interested in. Look for lenders with low advertised rates, great customer service scores, and recommendations from friends, family, or a real estate agent. Then get pre–approved by those lenders to see what rates and fees they can offer you. Compare your offers (Loan Estimates) to find the best overall deal for the loan type you want.

What are today’s mortgage rates?

Low mortgage rates are still available. Connect with a mortgage lender to find out exactly what rate you qualify for.

Show me today's rates (Jan 27th, 2022)


1Today's mortgage rates are based on a daily survey of select lending partners of The Mortgage Reports. Interest rates shown here assume a credit score of 740. See our full loan assumptions here.

Selected sources:

  • https://www.blackknightinc.com/category/press–releases
  • https://www.federalreserve.gov/monetarypolicy/fomccalendars.htm
  • http://www.freddiemac.com/research/datasets/refinance–stats/index.page

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