Mortgage interest rate predictions: Will rates go down in December 2022?

Paul Centopani
Paul Centopani
The Mortgage Reports Editor
December 1, 2022 - 17 min read

Mortgage rate forecast for next week (Dec. 5-9)

Interest rates continued their downward trend and fell for the fourth time in the last five weeks.

The average 30-year fixed rate mortgage decreased from 6.58% on Nov. 23 to 6.49% on Dec. 1, according to Freddie Mac. With inflation showing signs of lessening and the Federal Reserve hinting that smaller hikes are coming, lenders have eased the rates they’re offering.

“Investors have clearly viewed the inflation report – which hinted at a long-awaited deceleration in consumer price growth – as evidence that the Fed will take its foot off the macroeconomic brake and slow its pace of interest rate hikes,” said Matthew Speakman, Zillow Home Loans’ senior economist.

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Will mortgage rates go down in December?

Mortgage rates fluctuated greatly in the third quarter of 2022. The average 30-year fixed rate dipped as low as 4.99% on Aug. 4 then reached a high-water mark of 7.08% on Nov. 10, according to Freddie Mac.

This followed 248 basis points (2.48%) of growth in the year’s first half. Rates varied from one week to the next as the Fed wrestled with inflation. Mortgage rates experienced the largest weekly jump since 1987, surging 55 basis points (0.55%) the day after the Federal Reserve’s June hike.

With the pandemic’s declining economic impact, decades-high inflation, and the Fed planning several more aggressive hikes, interest rates could continue trending upward this year and next. However, concerns about an impending recession and waning buyer demand have caused brief rate drops and could cause more on any given week.

Experts from Attom Data Solutions, the Mortgage Bankers Association, the National Association of Realtors, and others weigh in on whether 30-year mortgage rates will climb, fall or level off in December.

“If inflation continues to decelerate over the next several months, mortgage rates will likely stabilize below 7%.”

–Nadia Evangelou, senior economist & director of forecasting at the National Association of Realtors

Expert mortgage rate predictions for December

Nadia Evangelou, senior economist & director of forecasting at the National Association of Realtors

Prediction: Rates will moderate

“Thanks to the rate-friendly inflation data, mortgage rates dropped back below 7%. It seems that the higher federal funds rates are starting to cool off inflation. And, if inflation continues to decelerate over the next several months, mortgage rates will likely stabilize below 7%.

Thus, rates will be in the 6%-7% range in December. That’s still double the previous year’s rate, but it’s better than an 8% rate, which is the historical average for the 30-year fixed mortgage. The monthly mortgage payment decreases by $250 when the rate drops by one percentage point.”

Selma Hepp, deputy chief economist at Corelogic

Prediction: Rates will moderate

“Recent sharp decline in mortgage rates reflects the latest data, which suggests a slowdown in the rate of inflation and a potentially less aggressive approach by the Fed as the inflation forecast gains some clarity. Mortgage rates are likely to stay at the current below-7% level barring any new economic or geopolitical shocks.”

Joel Kan, associate vice president of industry surveys and forecasts at Mortgage Bankers Association

Prediction: Rates will drop

“This is still a period of extremely elevated volatility, so rates can move quickly both up and down in a short span of time. However, incoming data suggesting slowing inflation, slower wage growth — and other signs that the U.S. and global economies are headed toward a slowdown next year — are consistent with our current forecast and we expect the 30-year fixed rate to average 6.7% in the fourth quarter of 2022.”

Odeta Kushi, deputy chief economist at First American

Prediction: Rates will rise

“The popular 30-year, fixed mortgage rate dipped recently as signs of slowing inflation pushed Treasury yields lower. But, as the San Francisco Federal Reserve Bank President Mary Daly warned, it is far too early for the U.S. central bank to ‘declare victory’ in its fight against inflation, and until inflation is contained, there is upside risk for mortgage rates.

The outlook for mortgage rates in December will depend on incoming economic data and whether that data points to inflation cooling or staying hot. If inflation continues to decelerate, mortgage rates may begin to stabilize. The Fed is also expected to release its dot plot projections at the December FOMC meeting. If inflation expectations are higher than expected or the Fed has to take more drastic actions than markets anticipate to tame inflation, mortgage rates may move up further.”

Taylor Marr, deputy chief economist at Redfin

Prediction: rates will moderate

“Mortgage interest rates for December are expected to trend flat to slightly down, but are ultimately hinging on three key dates for information right now.

The first is November’s employment report on Dec. 2. That will provide information about whether unemployment is continuing to increase following a flurry of layoffs in November and if job growth meaningfully slows. If so, that would be welcome news for mortgage rates to come down slightly as the Fed may become more cautious of a faltering labor market.

The second is November’s consumer price index data on Dec. 13, which will indicate if peak inflation is indeed behind us and progress is being made. A slightly lower inflation rate is currently expected, and that would also allow mortgage rates to come down and the Fed to become less aggressive. On the other hand, if it ticks up at all, we may see mortgage rates spike in anticipation that the Fed will aim to move rates higher for longer.

Finally, on Dec 14., the Fed will provide their interest rate decision and economic projections. At this point, markets are expecting a slowdown in rate hikes to 50 basis points from 75, but the outlook for the next year’s rate path will be more significant to what happens with mortgage rates. Unfortunately, all year the FOMC projections have revised up more than anticipated, pushing mortgage rates higher. This time might not be any different, despite market expectations.”

Rick Sharga, EVP of market intelligence at Attom Data Solutions

Prediction: Rates will moderate

“At the risk of sounding like a broken record, mortgage rates in December will be almost entirely dependent upon whether the Federal Reserve believes that it’s making progress getting inflation under control. The most recent inflation numbers have been encouraging, and at the very least may convince the Fed to limit its actions in December to a 50 basis points increase in the Fed Funds rate.

If that’s the case, mortgage rates will likely stay very close to where they currently are — somewhere between 6.5% and 7.0%. If the Fed believes it needs to more aggressively raise rates at its December meeting, we could see mortgage rates tick up over that mark.

Something else to keep an eye on is the possible escalation of the war in Ukraine. If that happens, it could have an impact on the global economy, further disrupt supply chains, and cause more volatility in the financial markets — including the mortgage industry.

Mortgage interest rates forecast next 90 days

With inflation running high and proving hard to control, the Federal Reserve is following an aggressive policy plan to bring it down. That’s led to an overall ramp-up of interest rates as lenders account for the Fed’s rate hikes.

Because of this, many experts currently believe mortgage interest rates will move within a tighter range in the fourth quarter compared to the large, rapid growth we saw earlier in 2022.

Of course, rate volatility could increase due to the uncertainty of a recession or the repercussions of global events impacting the economy.

Mortgage rate predictions for late 2022

The 30-year fixed-rate mortgage averaged 6.58% near the end of November, according to Freddie Mac. Only one of the six major housing authorities we looked at projects the fourth quarter average to finish below that.

The National Association of Home Builders and the National Association of Realtors sit at the low end of the group, estimating the average 30-year fixed interest rate will settle at 5.39% and 6.6% for Q4. Meanwhile, Freddie Mac, Wells Fargo, and Fannie Mae had the highest predictions, with forecasts of 6.8%, 6.95%, and 7%, respectively, by the end of 2022.

Housing Authority30-Year Mortgage Rate Forecast (Q4 2022)
National Association of Home Builders5.39%
National Association of Realtors6.60%
Mortgage Bankers Association6.70%
Freddie Mac6.80%
Wells Fargo6.95%
Fannie Mae7.00%
Average Prediction6.57%

Mortgage rates fell for the third straight week and four out of the last five.

The 30-year fixed rate decreased from 6.58% on Nov. 23 to 6.49% on Dec. 1. Similarly, the average 15-year fixed mortgage rate dropped from 5.9% to 5.76%.

MonthAverage 30-Year Fixed Rate
January 20223.45%
February 20223.76%
March 20224.17%
April 20224.98%
May 20225.23%
June 20225.52%
July 20225.41%
August 20225.22%
September 20226.11%
October 20226.90%

Source: Freddie Mac

Mortgage rates moved on from the record-low territory seen in 2020 and 2021 but are still below average from a historical perspective.

Dating back to April 1971, the fixed 30-year interest rate averaged around 7.8%, according to Freddie Mac. So if you haven’t locked a rate yet, don’t lose too much sleep over it. You can still get a good deal, historically speaking — especially if you’re a borrower with strong credit.

Just make sure you shop around to find the best lender and lowest rate for your unique situation.

Many mortgage shoppers don’t realize there are different types of rates in today’s mortgage market. But this knowledge can help home buyers and refinancing households find the best value for their situation.

Following are 3-month mortgage rate trends for the most popular types of home loans: conventional, FHA, VA, and jumbo.

October 2022September 2022August 2022
Conforming Loan Rates7.06%6.72%5.81%
FHA Loan Rates6.85%6.52%5.66%
VA Loan Rates6.74%6.36%5.45%
Jumbo Loan Rates6.78%6.49%5.57%

Source: Black Knight Originations Market Monitor Report

Which mortgage loan is best?

The best mortgage for you depends on your financial situation and your goals.

For instance, if you want to buy a high–priced home and you have great credit, a jumbo loan is your best bet. Jumbo mortgages allow loan amounts above conforming loan limits, which max out at $647,200 in most parts of the U.S.

On the other hand, if you’re a veteran or service member, a VA loan is almost always the right choice. VA loans are backed by the U.S. Department of Veterans Affairs. They provide ultra-low rates and never charge private mortgage insurance (PMI). But you need an eligible service history to qualify.

Conforming loans and FHA loans (those backed by the Federal Housing Administration) are great low–down–payment options.

Conforming loans allow as little as 3% down with FICO scores starting at 620. FHA loans are even more lenient about credit; home buyers can often qualify with a score of 580 or higher, and a less–than–perfect credit history might not disqualify you.

Finally, consider a USDA loan if you want to buy or refinance real estate in a rural area. USDA loans have below-market rates — similar to VA — and reduced mortgage insurance costs. The catch? You need to live in a ‘rural’ area and have moderate or low income to be USDA–eligible.

Mortgage rate strategies for December 2022

Mortgage rates grew fast and furiously to open 2022. The pace slowed in the second quarter, then interest rates shot up again after the Fed’s 0.75% federal funds rate hikes in June, July, September, and November.

The central bank said it anticipates multiple similar hikes throughout 2022 and 2023 until inflation gets under control. Mortgage rates could continue climbing in response. However, opportunities to lock in a lower interest rate do still exist for home buyers and refinancing homeowners.

Here are just a few strategies to keep in mind if you’re mortgage shopping in the coming months.

Marry the home, date the rate

Are you ready to buy a house, but don’t love the idea of locking into current interest rates? A small shift in perspective could sway you.

Your mortgage rate doesn’t have to be a long-term commitment, even with a fixed 30-year home loan. Refinancing is always an option later on if rates fall.

Mortgage rates are notoriously volatile. But the sooner you become a homeowner, the sooner you start building equity in your property. That’s why some lending professionals will tell you, ‘marry the home and date the rate.’

Locking in now and waiting for a downcycle to refinance into a lower rate could save you thousands over the lifetime of your loan. As a rule of thumb, refinancing normally becomes beneficial for a borrower once they can reduce their rate by 75 basis points (0.75%).

Never take the first offer

Since interest rates can vary drastically from day to day and from lender to lender, failing to shop around likely leads to money lost.

Lenders typically have different rates they reserve for different levels of credit scores. And while there are ways to negotiate a lower mortgage rate, the easiest is to get multiple quotes from multiple lenders and leverage them against each other.

“Research has shown that many borrowers only get rate quotes from a single lender,” said Len Kiefer, deputy chief economist at Freddie Mac. “Given the recent volatility in markets, rates can shift substantially day by day. A savvy customer would be informed about market conditions and consider multiple options before opting for a lender and loan product that best meets their needs.”

As the mortgage market slows due to lessened demand, lenders will be more eager for business. While missing out on the rock-bottom rates of 2020 and 2021 may sting, there’s always a way to use the market to your advantage.

How to shop for interest rates

Rate shopping doesn’t just mean looking at the lowest rates advertised online because those aren’t available to everyone. Typically, those are offered to borrowers with great credit who can put a down payment of 20% or more.

The rate lenders actually offer depends on:

  • Your credit score and credit history
  • Your personal finances
  • Your down payment (if buying a home)
  • Your home equity (if refinancing)
  • Your loan-to-value ratio (LTV)
  • Your debt-to-income ratio (DTI)

To figure out what rate a lender can offer you based on those factors, you have to fill out a loan application. Lenders will check your credit and verify your income and debts, then give you a ‘real’ rate quote based on your financial situation.

You should get three to five of these quotes at a minimum, then compare them to find the best offer. Look for the lowest rate, but also pay attention to your annual percentage rate (APR), estimated closing costs, and ‘discount points’ — extra fees charged upfront to lower your rate.

This might sound like a lot of work. But you can shop for mortgage rates in under a day if you put your mind to it. And shaving just a few basis points off your rate can save you thousands.

Mortgage interest rate FAQ

What are current mortgage rates?

Current mortgage rates are averaging 6.49% for a 30-year fixed-rate loan and 5.76% for a 15-year fixed-rate loan, according to Freddie Mac’s latest weekly rate survey. Your individual rate could be higher or lower than the average depending on your credit score, down payment, and the lender you choose to work with, among other factors.

Will mortgage rates go down next week?

Mortgage rates could decrease next week (Dec. 5-9, 2022) if the mortgage market takes a cautious approach to a possible recession. However, rates could rise if lenders account for the Federal Reserve continuing to take aggressive measures to counteract the high inflation of 2022.

Will mortgage interest rates go down in 2022?

It’s unlikely mortgage rates will go down in 2022, although their current growth should moderate at some point. Inflation has been climbing at a record rate over the last few months. And the Fed is planning to raise interest rates after each of its scheduled FOMC meetings. Both these factors should keep mortgage rates elevated in 2022.

Will mortgage interest rates go up in 2023?

Mortgage rates may continue to rise in 2023. High inflation, a strong housing market, and policy changes by the Federal Reserve have all pushed rates higher this year. However, if a serious recession comes on, we could potentially see a dip in mortgage rates.

What is the lowest mortgage rate right now? 

Freddie Mac is now citing average 30-year rates in the 6 percent range. If you can find a rate in the 4s or 5s, you’re in a very good position. Remember that rates vary a lot by borrower. Those with perfect credit and large down payments may get below-average interest rates, while poor-credit borrowers and those with non-QM loans could see much higher rates. You’ll need to get pre-approved for a mortgage to know your exact rate.

Will there be a housing crash? 

For the most part, industry experts do not expect the housing market to crash in 2022 or 2023. Yes, home prices are over-inflated. But many of the risk factors that led to the 2008 crash are not present in today’s market. Low inventory and massive buyer demand should keep the market propped up next year. Plus, mortgage lending practices are much safer than they used to be. That means there’s not a subprime mortgage crisis waiting in the wings.

What is the lowest mortgage rate ever?

At the time of this writing, the lowest 30-year mortgage rate ever was 2.65%. That’s according to Freddie Mac’s Primary Mortgage Market Survey, the most widely used benchmark for current mortgage interest rates.

Should I lock my rate now or wait?

Locking your rate is a personal decision. You should do what’s right for your situation rather than trying to time the market. If you’re buying a home, the right time to lock a rate is after you’ve secured a purchase agreement and shopped for your best mortgage deal. If you’re refinancing, you should make sure you compare offers from at least three to five lenders before locking a rate. That said, rates are rising. So the sooner you can lock in today’s market, the better.

Is now a good time to refinance? 

That depends on your situation. It’s a good time to refinance if your current mortgage rate is above market rates and you could lower your monthly mortgage payment. It might also be good to refinance if you can switch from an adjustable-rate mortgage to a low fixed-rate mortgage; refinance to get rid of FHA mortgage insurance; or switch to a short-term 10- or 15-year mortgage to pay off your loan early.

Is it worth refinancing for 1 percent? 

It’s often worth refinancing for 1 percentage point, as this can yield significant savings on your mortgage payments and total interest payments. Just make sure your refinance savings justify your closing costs. You can use a mortgage calculator or speak with a loan officer to crunch the numbers.

How do I shop for mortgage rates? 

Start by choosing a list of three to five mortgage lenders that you’re interested in. Look for lenders with low advertised rates, great customer service scores, and recommendations from friends, family, or a real estate agent. Then get pre-approved by those lenders to see what rates and fees they can offer you. Compare your offers (Loan Estimates) to find the best overall deal for the loan type you want.

What are today’s mortgage rates?

Mortgage rates are rising, but borrowers can usually find a better deal by shopping around. Connect with a mortgage lender to find out exactly what rate you qualify for.

1Today's mortgage rates are based on a daily survey of select lending partners of The Mortgage Reports. Interest rates shown here assume a credit score of 740. See our full loan assumptions here.

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