Next year’s predictions: Low mortgage rates and high home prices

Southern California mortgage rates will average 3.375%, while Southern California home prices will rise 8%.

By Jeff Lazerson | | | December 25, 2021

Disconcerting. Confounding. Whipsawed.

The World Health Organization has listed five COVID-19 variants of concern since December 2020. Of those, Delta and Omicron were the headliners. That’s an average of five new variants per year.

Globally, shutdowns and lockdowns continue to varying degrees. Just when we think the coast is clear, then it’s back to shutdowns, rising hospitalizations with a supply chain kerfuffle mixed in.

We’ve lost more than 800,000 U.S. lives. Planet Earth has lost more than 5.4 million. Our inability to contain the coronavirus, with all its upset and uncertainty, will likely translate into flat mortgage rates and higher home prices.

Those are just two of my predictions for 2022. Here are the rest of them:

  1. Even with inflation pressures, the 30-year Freddie Mac mortgage rate will stay relatively low, averaging 3.375%. The 2021 average was 2.95%.
  2. The 15-year Freddie Mac mortgage rate will average 2.625%. The 15-year averaged 2.27 in 2021.
  3. The median home price for the counties of Los Angeles, Orange, San Bernardino and Riverside will increase by 8%.
  4. The region’s home sales volume will be flat compared with 2021. Hey, year-to-date sales are up an eye-popping 18% through Dec. 15, according to Steven Thomas of Reports on Housing. Flat still means volume.
  5. California home sales volume will increase by 5%. Through the first three quarters of 2021, home sales are up more than 11%, according to Attom Data Solutions.
  6. The prime rate will increase to 4% from its current 3.25% rate. That’s three separate one-quarter point increases.
  7. Nationally, total mortgage fundings (purchase, refinancing and cash-out refinancing) will drop by 25% compared with 2021. That’s $3 trillion next year compared with an estimated $4 trillion in 2021. Anybody with a sub 3% mortgage is not going to go back to the well again in 2022. But more folks will tap their ginormous equity through cash-out refinancing.
  8. The Federal Housing Administration will decrease the FHA mortgage insurance premium it charges to consumers for most mortgages. The upfront MIP will drop to 1.25% of the loan amount from 1.75%. The monthly mortgage insurance premium will drop to 0.55% from 0.85%.
  9. The federal government won’t have any new COVID-19 mortgage payment forbearance programs. There will be no new eviction moratorium programs in California. Some mortgagors and renters received the help they needed. But too many others took advantage.

Let’s hope this year’s predictions are better than last year’s. Here are my 2020 results:

  1. The 15-year fixed will drop below 1%. Wrong. The Freddie 15-year fixed was as low as 2.1% on July 29. The 15-year averaged 2.27%. Not even close to 1%.
  2. Locally, the 30-year fixed will drop below 1.5% with points. Wrong. It never went that low.
  3. The 30-year jumbo fixed will drop below 2% with points. Wrong. It hit about 2.65% with points.
  4. The Freddie Mac 30-year fixed will average 2.65%. Wrong. It averaged 2.95%.
  5. Average Freddie Mac rates will start rising in the fourth quarter of 2021. Correct.
  6. Wall Street prime will remain at 3.25%. Correct.
  7. California eviction and foreclosure moratoriums will be lifted Oct 1. Correct, although tenants cannot be evicted through March 31 if they have completed an application for emergency rental assistance.
  8. Southern California median home prices will increase by 10%. Wrong. It was up by more than 15%.
  9. Southern California home sales will be flat. Wrong.
  10. A first-time buyer tax credit of $10,000 will be passed into law. Wrong.

Freddie Mac rate news: The 30-year fixed rate averaged 3.05%, down 7 basis points from last week. The 15-year fixed rate averaged 2.3%, down 4 basis points from last week.

Mortgage application volume dropped from the previous week, the Mortgage Bankers Association reported, but the decrease was less than 0.1%.

Bottom line: Assuming a borrower gets the average 30-year fixed rate on a conforming $647,200 loan, last year’s payment was $135 less than this week’s payment of $2,746.

What I see: Locally, well-qualified borrowers can get the following fixed-rate mortgages without points: A 30-year FHA at 2.375%, a 15-year conventional at 2.45%, a 30-year conventional at 3.125%, a 15-year conventional high-balance ($647,201 to $970,800) at 2.625%, a 30-year conventional high-balance at 3.19% and a 30-year fixed jumbo at 3%.

Eye catcher loan of the week: A 30-year purchase jumbo fixed at 2.5% with 1.5 points.

Jeff Lazerson is a mortgage broker. He can be reached at 949-334-2424 or His website is

* Specific loan program availability and requirements may vary. Please get in touch with your mortgage advisor for more information.

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Jeff Lazerson - Mortgage Columnist since 2011