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Mortgage Rates in Flux Due to Omicron Variant as Year Winds Down

By agedleadstore
Mortgage Rates in Flux Due to Omicron Variant as Year Winds Down Feature Image
3 minute read

Mortgage rates still are expected to rise into 2022, but the spread of a new Covid variant is creating a push and pull on rates due to economic uncertainty.

This week began with lower averages for both 30-year fixed and 15-year fixed rates, at 3.2 percent and 2.5 percent, respectively.

Both rates are at a decrease of one basis point from last week.

The Mortgage Bankers Association reported last week that purchase and refinance applications were down due to the slight rate increase.

Refinance applications were down 6 percent from the previous week, and 41 percent lower than the same week in 2020.

Mortgage purchase applications increased 1 percent from the previous week, but were 9 percent lower than the same week last year.

The initial uncertainty from the Covid omicron variant lowered rates for about four days, which caused many borrowers to call on their mortgage lenders for purchase and refinance opportunities.

So far, the new variant has been identified in at least 45 U.S. states. Experts believe rates are likely to continue fluctuating as the potential impact of this variant is weighed.

Experts predicted December would be a month of “volatile” rates as the year comes to a close, and recommended that interested borrowers watch these fluctuations for low rate opportunities.

With the Federal Reserve’s recent announcement to more rapidly dial back on its pandemic support actions, experts still are confident borrowers can expect higher rates in 2022.

Despite the certainty of a steady increase, experts believe the increase will remain relatively moderate for a while, and that current trends shouldn’t stop anyone’s plans to purchase or refinance.

The market still is favoring sellers, meaning continued high home prices. If rates remain historically favorable, this provides strong opportunities for cash-out refinancings to unlock substantial home equity.

The most common uses for this cash are home improvements, paying down high-interest debts, or for investment purchases.

Experts recommend borrowers shop around for the best interest rates, because personal rates depend on a variety of factors, including credit score and down payment amount.

Each lender evaluates a borrower’s situation differently.

Home sales typically slow down during the holidays, but if borrowers are able to catch a great low rate in the coming weeks, it may be worth it to take action immediately, experts say.

Taking on an adjustable-rate or fixed-rate mortgage is a personal financial decision, but experts are currently focused on fixed rates since rates are expected to continue rising.

Photo by SHVETS production from Pexels

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