The average 30-year fixed mortgage rate is up to 5.11% as of Thursday, April 21 after climbing two whole percentage points in a brief four-month window, and more gains are expected to follow, according to Fannie Mae’s latest forecast. In order for the Federal Reserve to control runaway inflation and cool the housing market, more price hikes are necessary to push buyers to the sidelines and cut down competition.
As a result, Fannie Mae now predicts that U.S. home prices will rise 10.8% in 2022, representing a slight deceleration from last year, but still double the average annual home appreciation (4.6%) posted since 1987, Fortune reports.
“Mortgage rates have ratcheted up dramatically over the past few months, and historically such large movements have ended with a housing slowdown. Consequently, we expect home sales, house prices, and mortgage volumes to cool over the next two years. In particular, we expect house price growth to decelerate to a pace more consistent with income growth and interest rates," writes Doug Duncan, chief economist at Fannie Mae, in the firm's latest report.
Read more
