- A rising federal funds rate has driven mortgage rates higher
- However, with medium-term expectations for continued hikes, where mortgage rates will be five years from now is uncertain
- Accordingly, calls for 9%+ rates in 2026 have investors concerned
As the Federal Reserve ramps up its interest rate hiking schedule and reduces its balance sheet, the interest rate consumers pay on almost everything will rise. For new homeowners, or existing homeowners looking to refinance, this isn’t a good thing. Mortgage rates are rising fast, and they are likely to continue rising. Accordingly, interest in mortgage interest rate price predictions over the next five years is high right now.
Where we’re at today is rather telling. According to Bankrate, the following rates are what homeowners can expect to pay at the time of writing:
- 30-year mortgage rate: 5.42%
- 15-year mortgage rate: 4.77%
- 5/1 ARM mortgage rate: 3.84%
- 30-year jumbo mortgage rate: 5.38%
Let’s dive into where the experts see mortgage rates headed. Now, these rates are down considerably over the past week, following the bond market’s moves. We’ve also covered where mortgage rates may be headed in the near term. That said, over the longer term, rates will likely rise dramatically.
Mortgage Interest Rate Price Predictions
According to LongForecast.com, mortgage rates could be on a rather steady climb over the next five years. Here are the site’s expert predictions for where mortgage rates could be headed.
For context, the current 30-year fixed mortgage rate is at 5.25%, slightly lower than that of Bankrate.
- 2022: 6.74%
- 2023: 8.28%
- 2024: 8.76%
- 2025: 9.12%
- 2026: 9.41%
Should these rates materialize, affordability relative to existing home prices would drop in half. The ability to get less mortgage on a house means more homebuyers will be priced out of the market. Additionally, those relying on the equity in their homes to finance their lifestyle in retirement may be hard-pressed to do so.
That said, many experts believe a cooling of the domestic housing market is necessary for inflation to come down. Less easy money won’t be good for assets in general. But if we’re to get these inflation numbers down, this move may be necessary.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
