While buying a home was made possible for so many in 2021, it was not always without difficulty. A housing shortage and rising prices created a market of fierce competition with bidding wars becoming a normal occurrence. The fears of an unstable economy and the uncertainty of a still-looming pandemic still cause many to question the future of homeownership in 2022. In this blog post, we’ll break down what you can expect this year in terms of the housing market and mortgage trends.   

Rates 

Mortgage rates have been historically low over the past few years but are expected to rise slightly. While forecasters aren’t anticipating huge increases throughout the year, an uptick in rates is the consensus. The Mortgage Bankers Association® predicts that rates will hit 4% by the end of 2022. Fannie Mae® expects the 30-year fixed rate to average 3.4% by the end of the year. Freddie Mac® and the National Association of Realtors® also believe that rates will rise steadily throughout the year. If you average all four of these groups’ predictions, it looks as if we can expect the 30-year fixed to average 3.33% in the first quarter and 3.7% in the fourth quarter.

Home Prices and Affordability 

There’s no question that affordable housing contributes significantly to the economy. From building generational wealth and creating new tax revenue for the local community, homeownership is still the American dream for many. Unfortunately, the market during an ongoing pandemic has edged out lots of people with high prices and low inventory. There may be some relief on the horizon, however. According to the Mortgage Bankers Association, home prices are expected to drop later into the year. The projection has the median price of existing homes posting a 15.3% year-over-year gain to $362,000 in the first quarter of 2022 but dropping to $352,000 by the end of the year. That would be a 2.5% year-over-year drop in home prices.  

Housing Market Crash Unlikely 

There have been fears of a housing market crash like what occurred in 2008 but that is doubtful according to experts. Unlike last time, home price appreciation is a result of supply and demand, not bad lending practices. What we’re seeing now are stricter lending rules and guidelines for purchasing a home coupled with a housing shortage. The economy continues to make a remarkable recovery following pandemic fears and people should be hopeful that the market will even out in 2022 as more homes become available.  

A More Streamlined Mortgage Experience 

Technology has made it possible for the full home buying experience to be simpler via hybrid e-closings. We can expect electronic mortgage closings to become more common and accessible to both borrowers and lenders. This will likely cut out additional steps like copying and shipping as the process can be done using electronic tablets allowing borrowers to sign much of their paperwork digitally. It also can reduce in-person closing time to 15 minutes or less and can limit in-person interactions, saving everyone involved valuable time. Silverton Mortgage is proud to have closed 1,000 loans digitally since its beta launch in April of 2021 and looks forward to continuing to find ways to make the mortgage process easier for our borrowers. 

Having Options is Key 

With a housing shortage, more stringent lending standards, and a slight rise in interest rates, it will be more important than ever to have choices in 2022. Silverton Mortgage offers a variety of loan options to make homeownership a possibility for thousands of Americans. With Silverton Secure, borrowers can have their loan sent through underwriting BEFORE making an offer. This can give sellers the peace of mind they need to move forward with an agreement. FHA, VA, and USDA* loans can also help first-time homeowners, especially as millennials continue to dominate the market. New construction loans will be important as we see homebuilders continue to try and ramp up their supplies. Speaking with a trusted mortgage professional who is willing to review your unique circumstances and explain which options are best suited to you can save money and headaches. 

The Bottom Line 

Homeownership is still an accessible dream and while we may see some shifts in the market this year, it’s nothing that experts foresee as crippling to the average mortgage seeker. Rates are expected to remain reasonable, there’s an end in sight as far as the housing shortage is concerned, and the market is in a much better place than it was in 2008. We anticipate the closing process to become easier for everyone involved and having loan programs designed to help people achieve homeownership keeps the dream alive for yet another year. 

Do you have questions about the mortgage process and what homeownership could look like for you? Contact a Silverton Mortgage professional today and let us help! 

* Silverton Mortgage is authorized to originate [FHA, VA, USDA] loans, but it is not an agent of, or affiliated with, the U.S. Government.