The shift in interest rates is in motion. According to Forbes.com, mortgage rates have jumped 1.5 percentage points during the first three months of this year. They further communicated that rising inflation is one reason we can expect rates to climb and another main catalyst was the Federal Reserve starting its rate hike in March, the first increase since late 2018.
Experts are forecasting that the 30-year, fixed-mortgage rate will vary from 4.8% to 5.5% by the end of 2022.
Second home loan rates have also risen sharply and are now more in line with investment property loan rates. At the beginning of 2022, those looking to purchase a second home loan could find rates in the 3 to 3.5% range, but this past week during the month of April, the second home rate has been around 5.5% with 25% down and closer to 6% with 20% down.
The steep rise in second home loan rates is primarily due to Fannie Mae and Freddie Mac’s policy change as of April 1, 2022, to charge more for second home loans. The Federal Housing Finance Agency (FHFA) announced these targeted increases back in January to upfront fees for second home loans(and certain high balance loans). For second home loans, the upfront fees have increased between 1.125 percent and 3.875 percent, tiered by loan-to-value ratio.
Lauren Bunting is an Associate Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.
Lauren Bunting is a Broker with Keller Williams Realty of Delmarva in Ocean City, Maryland.