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

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

Mortgage rate forecast for next week (May 23-27)

After a big jump following the Federal Reserve’s May meeting and latest hike to combat inflation, mortgage rates grew again.

The average 30-year fixed interest rate increased from 5.27% on May 5 to 5.30% on May 12.

Most indicators point toward interest rates growing further in 2022, with the Fed planning hikes after each of its remaining 2022 meetings.

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

Will mortgage rates go down in May?

Mortgage rates surged through the first quarter of 2022. The 156 basis point (1.56%) gain represented the fastest three-month rise since May 1994, according to Freddie Mac.

With the pandemic’s declining economic impact, inflation running at 40-year highs, and the Federal Reserve outlining an aggressive policy plan, interest rates could continue trending upward.

Experts from the Mortgage Bankers Association, First American and other industry leaders expect 30-year mortgage rates to keep climbing in May — though perhaps not as quickly as they have over the past month.

With the Fed signaling its rate-increase plans well in advance, mortgage markets have likely already priced in the bulk of the impact.

Of course, the war in Europe or a spike from a new Covid variant could cause interest rates to drop from week to week.

“The path to higher rates may be bumpy, but the message from the Fed is clear – aggressive tightening is necessary to tame inflation.”

Odeta Kushi, deputy chief economist at First American

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

Prediction: Rates will rise

“The Federal Reserve will again raise its benchmark rate in May. With the unemployment rate near record lows and inflation the highest in four decades, the Federal Reserve may take a more aggressive rate hike this time, pushing up mortgage rates further.

I expect the 30-year fixed mortgage rate to average 5.2% next month. As inflation will eventually start slowing down later this year, mortgage rates may not rise as fast as they do now. Thus, I expect the 30-year fixed mortgage rates to average about 5% in 2022.”

Daryl Fairweather, chief economist at Redfin

Prediction: Rates will moderate

“Mortgage rates have already gone up to reflect the Fed’s unwinding of its mortgage portfolio and its plans to raise the federal funds rate. If rates go up more it will be because inflation remains out of control. But if the Fed does get a hold of inflation, it’s possible rates could go down moderately. We’ll have to wait and see.”

Mike Fratantoni, chief economist at Mortgage Bankers Association

Prediction: Rates will rise

“Given that we are past full employment and with inflation running over 8% annually, our expectation is that the Federal Reserve will continue with rapid rate hikes this year, and for the Federal funds rate to reach a range of 2.25% to 2.5% by the end of 2022. We expect the rate hikes to continue through mid-2023.

Additionally, the Fed will be announcing plans to reduce the size of their Treasury and MBS holdings at their upcoming meeting in May, quickly ramping up to reductions of $95 billion per month. This will add additional volatility to the mortgage market and will be another factor keeping mortgage rates elevated.

The inflation picture and the signals of tightening from the Fed have pushed Treasury yields significantly higher in recent weeks and have added considerable volatility for mortgage rates. Our forecast is for the 10-year Treasury yield to end 2022 at around 2.8% and remain at those levels through 2023, before falling to 2.5% in 2024. Mortgage rates are expected to end 2022 at 4.8% – and to decline gradually to 4.6% by 2024 – as spreads narrow.”

Selma Hepp, deputy chief economist at CoreLogic

Prediction: Rates will moderate

“Runaway inflation expectations are posing serious concern for the Federal Reserve which has become increasingly more vocal about its attempt to be more aggressive in reining it in. As a result, we’ve seen a surge in mortgage rates significantly above levels where we expected at this point.

Some of the run up is a response to Fed’s balance sheet reduction and some is anticipation of Fed’s moves. Nevertheless, demand is starting to negatively respond to higher rates which is likely to slow further mortgage rate increases. While rates will continue to oscillate, they are likely to remain around 5% range.”

Odeta Kushi, deputy chief economist at First American

Prediction: Rates will rise

“The 30-year, fixed mortgage rate has increased sharply and swiftly over the past several months, and the expectation is that rates will continue to rise in May. The path to higher rates may be bumpy, but the message from the Fed is clear – aggressive tightening is necessary to tame inflation.

In addition to Federal funds rate hikes, the Fed is expected to begin reducing its balance sheet as early as May, and eventually may consider sales of agency mortgage-backed securities (MBS), which will put direct upward pressure on mortgage rates. Ongoing geopolitical uncertainty may prompt swings in the mortgage rate on a daily or weekly basis, but the trend for mortgage rates is still to the upside.”

Ralph McLaughlin, chief economist at Kukun

Prediction: Rates will rise

“Recent signals from the Federal Reserve show that their main monetary concern is getting this historically high inflation under control. As American households continue to get hammered on rising costs seemingly everywhere, the markets expect the Fed to get more bullish.

That means the Fed may very well ditch the usual incremental interest rate raises of 25 basis points and raise rates by 50 bps in May. And if that doesn’t do the trick, they will likely go another 50 bps again in mid-June.”

Mortgage interest rates forecast next 90 days

Aside from uncertainty surrounding the Russian-Ukrainian conflict or a spike in positive Covid cases warranting new restrictions, all other major indicators point toward further mortgage rate growth.

In all likelihood, average interest rates will increase over the next three months. Of course, mortgage rates tend to be volatile so we could see some drops mixed in as well.

Mortgage rate predictions for 2022

The average 30-year fixed rate mortgage ended 2021 at 3.1%, according to Freddie Mac.

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

The National Association of Realtors and Fannie Mae sit at the low end of the group, estimating the average 30–year fixed interest rate will settle at 3.5% or 4.6% by the end of Q2. (Though, NAR’s is likely due to its forecast lagging behind the others.) The Mortgage Bankers Association and Freddie Mac had the highest predictions, with forecasts of 4.7% and 4.8%, respectively, by the end of June.

Housing Authority30-Year Mortgage Rate Forecast (Q2 2022)
National Association of Realtors3.50%
Fannie Mae4.60%
National Association of Home Builders4.61%
Wells Fargo4.65%
Mortgage Bankers Association4.70%
Freddie Mac4.80%
Average Prediction4.48%

Mortgage rates climbed again in the wake of the latest Federal Reserve meeting.

The average 30-year fixed rate grew from 5.27% to 5.30% for the seven days ending May 12, according to Freddie Mac’s weekly rate survey.

The 15–year fixed rate actually declined from 4.52% to 4.48%, while the average rate for a 5/1 ARM rose from 3.96% to 3.98%.

MonthAverage 30-Year Fixed Rate
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%
January 20223.45%
February 20223.76%
March 20224.17%

Source: Freddie Mac

Mortgage rates moved on from the record–low territory seen in 2020 and 2021 but are still low from a historical perspective.

Dating back to April 1971, the fixed 30–year interest rate averaged 7.79%, according to Freddie Mac.

So if you haven’t locked a rate yet, don’t lose too much sleep over it. You can still get a great deal — 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.

March 2022February 2022January 2022
Conforming Loan Rates4.79%4.09%3.77%
FHA Loan Rates4.81%4.11%3.86%
VA Loan Rates4.57%3.77%3.56%
Jumbo Loan Rates4.37%3.76%3.45%

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 $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 May 2022

Mortgage rates opened 2022 with huge and rapid growth. While the pace may slow, they’re expected to keep climbing in May and through the rest of the year. But opportunities to lock in a low 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 next few months.

The time to lock a rate is now

The Federal Reserve is set to raise its federal funds rate target following each of the six remaining FOMC meetings this year. The central bank plans to do this as a counter to the country’s historically high inflation and mortgage interest rates tend to grow in response.

While mortgage rates have spiked throughout the year, the average 30-year fixed rate jumped 31 basis points (0.31%) immediately after the FOMC meeting in March. The next two meetings are scheduled for May 3-4 and June 14-15.

While mortgage rates are notorious for their week-to-week volatility, nearly every indicator points to them growing over the rest of 2022.

If you’re ready to buy a home or refinance, the sooner you lock in a rate, the better. Getting ahead of the game and lining up all your paperwork will only help you to get approved faster.

Create a lower rate for yourself

No, you won’t need a time machine (or a crystal ball).

Getting the best interest rate for your financial situation will just take a little work. While the growing rate environment hurts affordability, you can also use it to your advantage.

The year’s rising rates decreased mortgage volume, which means lenders need business and are more likely to compete for yours. Once you get a prequalified or qualified rate from one lender, take the additional steps of shopping it around to others.

That competition will result in locking in a lower rate and potentially saving thousands of dollars 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 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 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.

Mortgage interest rate FAQ

What are current mortgage rates?

Current mortgage rates are averaging 5.30% for a 30–year fixed–rate loan, 4.48% for a 15–year fixed–rate loan, and 3.98% 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 (May 23-27, 2022) depending on if the market overcorrected for the latest hike from the Federal Reserve. However, rates could rise if the high inflation of 2022 continues and needs to be reigned in.

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 raise interest rates after each of its scheduled FOMC meetings. 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 now citing average 30–year rates in the 5 percent range. If you can find a rate in the 4s, you’re in a very good position. 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 could see much higher rates. 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 subprime 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.

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:


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