skip to Main Content

California VA Loan Interest Rates Expected to Rise in 2022

Are you planning to use a VA home loan to buy a house in California? If so, you might want to consider making your purchase sooner rather than later. According to a pair of recent forecasts, California VA loan rates could increase later in 2021 and into 2022.

Additionally, home prices in most California cities continue to climb at a steady pace. So those people who buy a house later this year or next could encounter higher housing costs.

But in this article, we will be focusing on current VA loan interest rates in California as well as forecasts and predictions for 2022.

Outlook for California VA Loan Rates in 2021 -2022

The VA home loan program is a popular financing option among California’s military members and veterans. This unique program offers a plethora of benefits for borrowers, including the ability to avoid making a down payment.

Like other types of mortgage products, California VA loans have interest rates assigned to them. Interest is paid on a monthly basis and therefore affects the size of your mortgage payments. Getting a lower rate on a VA loan can save you money over time. So that’s obviously something you want to strive for when buying a home.

As of summer 2021, VA loan interest rates in California were hovering near a historic low. The average rate for a 30-year fixed mortgage was around 2.8% at the end of July. That’s based on the weekly industry survey conducted by Freddie Mac.

But what about the future? Will California VA loan rates start to rise later in 2021? And what are they expected to do in 2022?

Predicting future mortgage rate trends is tricky business. Interest rates are affected by a number of variables, ranging from economic activity to investor demand within the secondary mortgage market. But that doesn’t stop people from issuing forecasts.

A pair of recent forecasts predicted that we could see higher rates for California VA loans later this year and into 2022. Those predictions were issued by the Mortgage Bankers Association and Freddie Mac. (The former is an industry group that represents lenders in the United States; the latter is a government-sponsored corporation buys mortgage loans from lenders.)

Summary of Recent Mortgage Rate Forecasts

We summarized these two long-range forecasts in a recent blog post. The short version is that both of these groups expect home loan interest rates to rise gradually over the coming months.

The research team from Freddie Mac predicted that 30-year mortgage rates would end up averaging around 3.4% by the end of 2021. As for 2022, they expect rates to rise gradually from one quarter to the next – perhaps ending the year at around 3.8%.

The Mortgage Bankers Association issued a similar forecast through the end of 2021. But their predictions for 2022 suggest that California VA loan rates could rise even higher than Freddie Mac’s estimate. The MBA predicted that the average rate for a 30-year fixed mortgage would reach 4% by the middle of 2022, and climb beyond that through the end of next year.

Granted, these are predictions based on current trends and conditions within the economy and mortgage market. They are the equivalent of an educated guess and therefore far from certain.

Still, it’s noteworthy when multiple industry analysts issue the same kinds of forecasts. The general consensus among these and other groups is that VA home loan rates in California and nationwide could start to rise later this year and into 2022.

The bottom line here is that now is a great time to take out a VA loan in California. Thirty-year mortgage rates are hovering well below 3% on average (depending on the borrower’s qualifications and other loan factors). This represents a prime opportunity for borrowers, especially those who plan to lock in their rate for the long term.

But we don’t know how long these favorable conditions will last. Forecasts suggest that we could potentially see higher VA loan rates in California over the coming months and into 2022. Those predictions, combined with the ongoing rise of home prices across the state, make a pretty good argument for buying a home sooner rather than later.

Have Questions About This Program?

Do you have questions about using a VA loan to buy a house in California? Would you like to know how much you can borrow or what mortgage rate you qualify for? We can help!

Bridgepoint Funding specializes in California VA loans we are located in the bay area but serve the entire state of California. We offer VA loans of all sizes, including those that fall into the multimillion dollar range. Please contact us if you have questions about California VA loans for if you would like to start the application process.

Mike Trejo

Mike Trejo is a Bay Area mortgage broker with 20+ years of knowledge and experience.

Back To Top