Will mortgage rates be higher in 90 days? Should I refinance or lock my rate now? (Jan 2022)

My pensive prediction


Prediction Date: 01/11/2022

Deadline Date: 04/11/2022

Jan 28 Update: Mortgage rates have continued climbing since my prediction, with the average 30 year mortgage rate as tracked by the MBA jumping to 3.7% compared to 3.3% at the time of prediction.

Original Prediction

The MBA 30 year mortgage rate survey measures the average mortgage rate in the country over the past week. The last report from Jan 5 was 3.33%, up from 3.16% from in October.

MBA 30 Year Mortgage Rate
Source: Investing.com / MBA

Mortgage rates are tied to treasury rates, and treasury rates have jumped up from ~1.50% to 1.75% in the last week and a half. Based on that simple correlation, we could easily expect to see the surveyed average mortgage rate to hit 3.50% soon.

Outside of the occasional market shock, the difference between 10 year yields and mortgage rates has been relatively constant
Source: Black Knight

Looking into the future, I expect omicron to fade and the economy to return to firing on all cylinders. Inflation will stay elevated and the Fed will be forced to raise interest rates several times this year, which will continue to push treasury yields higher.

If you’re in the middle of refinance or purchasing a house, the moral of the story is to lock in your rate now.