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Michael’s Mortgage Minute – 2022 Forecast

2022 Forecast for Mortgage Rates and Housing Market

2022 Dynamics: The Fed will play a major role in 2022. They will be tapering what they are purchasing as far as Mortgage Bonds and Treasuries, hiking short term rates, and having a balance sheet runoff. This can impact equity markets, drive interest rates, impact housing, as well as jobs. Fighting inflation will be their main focus. They should have hiked rates sooner – mistakenly thought inflation was “transitory”.

There are some wildcards that will come into play. Covid plays a major influence on monetary policy and supply chains. Major surprise in Covid could change outlook dramatically. Additional stimulus may fan flames of inflation. This would push Stock prices temporarily higher, cause mortgage rates to rise further, and make the Fed’s job of corralling inflation more difficult.

The runoff of Fed’s Balance Sheet

· First step – Fed to stop purchasing new Mortgage Bonds and Treasuries

· Next step – Hiking Fed Funds Rate

· Fed still buying $70B/month in Mortgage Bonds through reinvestments, keeping rates low

· If/when Fed stops reinvestments, mortgage rates could move higher than previously thought

Interest rates most likely will rise along with inflation during the first part of the year towards 3.75%. With Fed action, softer stock market, and slowing economic conditions, interest rates should head lower in the second part of the year towards 3%.

Housing will remain strong in 2022, but not as strong in 2021. Demand may be slightly softer due to a rise in interest rates, but still robust. Supply will increase but remain tight. Tight labor, supply chain disruptions, and semiconductor shortages will all play a role. Rents will continue to rise. Increases will remain above 5%, pushing many people to see the benefit in buying. Mid to high single-digit appreciation, still providing a great wealth creation opportunity.

For a free consultation to find out what you are preapproved for to purchase or a free mortgage fitness check up to make sure your current mortgage fits what your short and long-term financial goals are, as well as your payment and equity objectives, please call me at (702) 592-0722 or email me at

Michael Scialabba

Home Loan Strategist


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