California Mortgage Rate Forecast for 2022: A Gradual Rise Expected

A new mortgage rate forecast for California and the nation suggests that rates could rise gradually between now and 2022. This prediction was part of a broader housing market and mortgage rate forecast published by Freddie Mac, earlier this month.

If their projections turns out to be accurate, California home buyers could encounter higher mortgage rates in 2022 compared to where we are right now.

Updated Forecast for California Mortgage Rates in 2022

On July 15, the government-sponsored mortgage buyer Freddie Mac published their latest quarterly forecast for the U.S. housing market and mortgage industry. Freddie Mac has a team of economists and analysts who monitor current conditions within the housing industry and offer predictions for the future.

So what’s the forecast for California mortgage rates in 2022? According to the research team at Freddie Mac, we could experience a gradual and slight increase in interest rates between now and next year. That’s their current outlook, as of July 2021.

Here is a quarterly breakdown of Freddie Mac’s predictions for average 30-year mortgage rates:

• Q3, 2021 — 3.3%
• Q4, 2021 — 3.4%
• Q1, 2022 — 3.5%
• Q2, 2022 — 3.6%
• Q3, 2022 — 3.7%
• Q4, 2022 — 3.8%

This forecast for mortgage rates in California and nationwide predicts a gradual but steady increase between now and the end of next year. Again, it’s just a projection, and it could turn out to be inaccurate over time. But it’s something worth considering if you’re planning to buy a home with a mortgage loan over the coming months.

Long-Range Predictions Far from Certain

As of late July 2021, the average rate for a 30-year fixed mortgage loan was around 2.78%. That average is based on the weekly survey conducted by Freddie Mac.

Their latest quarterly forecast predicts that 30-year home loan rates could rise to around 3.8% by the end of 2022. That would be an increase of more than 1% from where we are right now, as of summer 2021.

But keep in mind this is just a mortgage rate forecast for California and the rest of the nation. Such predictions are far from certain.

There are a lot of different variables that can affect home loan interest rates, and those variables are ever-changing. As a result, it’s nearly impossible to make a long-range mortgage forecast that’s completely accurate.

Still, it’s noteworthy when some of the most knowledgeable market analysts predict a steady rise in mortgage rates.

If this forecast turns out to be even remotely accurate, it would make a strong case for buying a home sooner rather than later. In this particular mortgage rate forecast scenario, California home buyers who postpone their purchases could encounter higher borrowing costs down. Something worth considering.

Home Buyers Should Keep an Eye on Rising Prices

Rising home prices are even bigger concern for a lot of California home buyers. California mortgage rate forecasts for 2022 suggests that borrowers could see higher interest rates next year. But for many buyers, it’s the steady rise in home prices that presents a bigger challenge.

According to Zillow, the median home value in California rose by more than 18% over the past year or so. (This was reported in late July 2021.) Looking forward, they predict that prices across the Golden State will continue to climb well into 2022.

In some of the state’s hottest housing markets — like Sacramento and portions of the Bay Area — prices have risen by more than 20% in the past 12 months alone.

These trends could create a sense of urgency among some home buyers, especially those whose budgets are already being stretched by rising costs.

As with the mortgage rate forecast above, the prediction for rising home prices in California makes a strong case for buying sooner rather than later. Buyers who put off their purchases until later in 2022 could potentially encounter higher prices and mortgage rates.

Here’s the bottom line to all of this. No one can predict future real estate or mortgage trends with complete accuracy. But the general consensus among economists is that mortgage rates will rise slightly over the coming months, while home prices will continue to climb steadily. Those are two trends worth keeping an eye on, if you plan to buy a home in California later in 2021 or in 2022.

Disclaimer: This article includes California mortgage rate forecasts and predictions issued by third parties not associated with our company. Such projections are the equivalent of an educated guess and should be treated as such.