What’s going to happen with mortgage interest rates this year? To answer today’s question, I think it’s important to look at what has happened in the past. Over the last year or so, we’ve seen interest rates plummet due to the pandemic, and mortgage rates dropped significantly when the Federal Reserve was pumping tons of money into mortgage-backed securities.

"The days of getting a 2% interest rate are over."

More recently, the Fed has slowly been removing the amount they’re putting into buying those securities, which caused interest rates to climb. In addition to that, we’re also noticing a lot of volatility in the stock market; people are pulling money out of stocks and buying bonds.

The trajectory of interest rates has been going up significantly as far as mortgages are concerned. That was expected, but rates are going up a lot faster than many people had projected. I’m here to tell you it's going to stay that way. If you’re looking to buy a home or refinance and you’re waiting to lock in a lower rate, understand that the days of getting a 2% interest rate are over and that rates will continue to rise throughout the year.

Rising interest rates and monthly payments may help slow down demand a little bit and inch us closer to a more balanced market. That said, don’t expect the market to balance itself out this year; prices will continue to increase here in the Phoenix area. Every day that you wait, your mortgage payment will go up. The sooner you can buy, the better.

If you have any questions about buying or selling a home or the market in general, don’t hesitate to give us a call or send us an email.