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Amerifirst 2022 Mortgage Forecast: Rising Interest Rates, Loan Volume Reductions, Stable Housing Market

KALAMAZOO, MI (Dec. 16, 2021) - As one of the most robust years for the housing market comes to a close, consumers will experience a vastly different buying and selling environment in 2022, according to Amerifirst Home Mortgage’s 2022 Forecast.

 

Housing experts believe that the home mortgage industry will experience significant slowdowns in loan originations, says Amerifirst Chief Executive Officer Mark Jones. “The overall market (purchase and refinance) will drop from $4.2 Trillion to $3 Trillion in 2022," Jones said. "While interest rates on a 30-year fixed mortgage are expected to trend upwards throughout the year to approximately 3.7 percent, representing an increase of 70 basis points."

That increase in interest rates will set in motion a series of related events, according to the company’s predictions. These include:

  • Declining refinance activity
    Jones says we can expect to see a significant drop off in the number of homeowners refinancing their homes - perhaps as much as a 60 percent reduction - from $2.32 trillion in refinances in 2021 to $860 Billion in 2022.

  • Higher mortgage payments
    With interest rates trending upward, new homebuyers can expect higher mortgage payments due to corresponding increases in principal and interest costs. On a $300,000 mortgage, each ¼ percent increase in interest rate translates to an additional $41 in monthly payment. 

  • Softening of tight housing market
    Home price appreciation will taper back from an average of 18 percent in 2021 to a more typical annual rate in the mid-single digits. That will help ease the tight housing supply, opening up buying opportunities.  “The rapid appreciation of 2021 exacerbated an existing shortage of housing supply due to too many borrowers chasing too few homes for sale. Expect this pressure to alleviate a bit in 2022,” Jones said. 

  • Stability in the market
    Jones dismisses fears of a housing market collapse.  “There is no comparing this market to that of 2008, which was fraught with poor underwriting standards and predatory practices. Today’s home purchase market might have pent-up demand, but it rests on a foundation of stronger underwriting standards, lower leverage, and tighter regulation."

 

In the market for a new home?

“Get moving,” Jones says.  “Start shopping for a home now and take advantage of the current rates in the three percent range before they jump almost three quarters of a percent. Keep in mind that as interest rates increase, you’re going to lose purchasing power.”

 

About Amerifirst Home Mortgage

Amerifirst is a full-service residential mortgage originator and servicer. As an advocate for affordable homeownership and a mission to make a meaningful difference in the lives of others, the company consistently ranks as a top producing lender of FHA and USDA Rural Development loans. It employs over 900 team members and operates in branches throughout the U.S. and is recognized by Inc. 5000 for significant growth for seven out of the past ten years. Committed to operating by a strong set of core values, it has ranked as a Best & Brightest Company to Work For in the Nation for the past six years and was named a Best Mortgage Company to Work For in 2021. It is headquartered in Kalamazoo, Michigan.

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