By Mike Sunnucks | Rose Law Group Reporter
Mortgage interest rates are moving up and are now slightly above 3.5%. That comes after ending 2021 in the 3% range.
The upward movement in the first weeks of 2022 could be a harbinger of higher interest rates with inflationary concerns spurring increased investor interest in bonds and expected rate hikes from the Federal Reserve Bank.
Steve Hensley, advisory manager for real estate research firm Zonda, said the Fed could raise benchmark rates three times this year.
“We have been in the 3% range for some time,” Hensley said, noting the last time rates were 3.5% or higher was before the start of the coronavirus pandemic in early 2020.
Lower interest rates helped spur unprecedented housing demand in metro Phoenix and other housing markets in 2020 and into 2021.
A sustained jump in lending rates will impact real estate markets, Hensley said.
They will squeeze the qualifying and buying power of buyers. He said the recent rise translates into a $100 increase in mortgage costs for an average borrower.
The Phoenix and Tucson housing markets have continued to show sales growth and price increases though not at the same historic pace of 2020 and the early parts of 2021.
The next Federal Reserve meeting is scheduled for Jan. 25 and 26 with a 0.25 basis point increase to the central bank’s benchmark rate expected.
Inflation, supply chain snafus and labor shortages have all impacted the wider economy as well as real estate and housing.
