Mortgage Interest Rates Forecast

Jan 27, 2022

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Mortgage rates today: Thursday, January 27, 2022

On Thursday, Jan. 27, 2022, the average interest rate on a 30-year fixed-rate mortgage leaped 23 basis points to 3.722% APR. The average rate on a 15-year fixed-rate mortgage rose 19 basis points to 2.88% APR and the average rate on a five-year adjustable-rate mortgage jumped 15 basis points to 3.065% APR, according to rates provided to NerdWallet by Zillow. The 30-year fixed-rate mortgage is eight basis points higher than one week ago and 96 basis points higher than one year ago. A basis point is one one-hundredth of one percent. Rates are expressed as an annual percentage rate, or APR.

NerdWallet's coronavirus resources page tracks the latest developments, including information on loan and payment relief, ways to cope and how to best manage your personal finances.

If you can't make your full mortgage payment, or you're worried that you won't be able to make the payments soon, contact your mortgage servicer immediately. You may be eligible for mortgage forbearance, temporary relief in which the lender allows you to make lower monthly payments, or no payments at all, for a specified time. NerdWallet's article about mortgage forbearance explains the basics.

A forbearance may prevent you from getting another mortgage for at least three months. Lenders are unlikely to approve you for a mortgage until you have made three on-time payments following the forbearance. During that period, you probably won't be able to get a mortgage to buy a home or to refinance.

See what types of mortgage relief programs are available to homeowners who are worried about making their house payments due to the coronavirus outbreak.

To get help, you will need to contact the mortgage servicer that collects payments. See an alphabetical list of mortgage servicers with contact information.

Here are general guidelines for what to do if you can't pay your mortgage.

Mortgage rates this week

Mortgage rates held steady in the week ending Jan. 27, but fixed rates were up about half a percentage point from a month ago.

  • The 30-year fixed-rate mortgage averaged 3.59% APR, up 1 basis point from the previous week's average.

  • The 15-year fixed-rate mortgage averaged 2.76% APR, the same as the previous week's average.

  • The five-year adjustable-rate mortgage averaged 3.01% APR, the same as the previous week's average.

As mortgage rates held their own this week, the Federal Reserve said that it's prepared to hike short-term interest rates soon. After the Federal Open Market Committee met Jan. 26, Fed Chairman Jerome Powell told reporters that officials would likely raise the federal funds rate at their mid-March meeting.

The benchmark rate — the interest banks charge one another for short-term loans — is the Fed's most powerful tool to support the economy. An increase trickles down to consumers in higher rates on loans and savings accounts.

That means you could earn a little more interest on the home down payment you're saving this year, but you could also pay more for a mortgage.

To get the best rates, shop around. And if you're thinking about buying a home, work on getting your finances into shape. The lowest mortgage rates go to borrowers with high credit scores, low debt-to-income ratios and hefty down payments.

January mortgage rates forecast

I predict that mortgage rates will stay about the same in January. They're more likely to dip modestly than to rise.

The omicron variant of COVID-19 might exert its strongest impact on the U.S. economy and health care system in January, before easing up in February. I expect the economic effect of January's omicron wave to keep a lid on mortgage rates.

If I'm wrong, it will be because mortgage rates' recent upward trend is relentless despite workers calling in sick, airlines canceling flights and consumers paying off holiday debts rather than shopping. That last item is what we typically see every January.

What happened in December

Mortgage rates remained steady during the first three weeks of December. But the average rate on the 30-year mortgage rose 10 basis points in the last week of the year. That nudged the average rate for the month a little higher: from 3.03% in November to 3.06% in December.

This is as I predicted. At the beginning of December, I wrote that "much of December's rate increase will happen in the last week or so of the year." Allow me to pat myself on the back. I'm frequently not wrong with these monthly forecasts, but I seldom make a prediction that's this specific and then hit the bull's-eye.

Looking back at 2021

The average rate on the 30-year fixed-rate mortgage was much lower in 2021 than in 2020, which supported a sharp increase in house prices.

In 2020, the 30-year mortgage averaged 3.27% in NerdWallet's survey. The average for the whole year fell to 2.96% in 2021. Meanwhile, home prices went up unsustainably fast. The median price of an existing home jumped 13.9% in the 12 months ending in November, according to the National Association of Realtors.

When mortgage rate averages are viewed quarter by quarter, the 30-year mortgage followed an up-down-up trajectory in 2021. The undulations weren't especially harsh.

A rise in rates is undeniable, if gentle, since September. The 30-year mortgage averaged 2.89% in the third quarter of the year and 3.04% in the fourth quarter. Forecasters expect rates to keep going up in 2022, but most predict that the 30-year mortgage will remain under 4%.

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See the year’s best mortgages for first-time home buyers, refinancing, and more. Thoroughly researched by our Nerds.
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