First Federal Savings Bank Twin Falls

Is Now the Time to Buy or Refinance?

March 2022

This Spring and Summer can be critical moments for the housing market. Already, mortgage rates are beginning to creep back up.

With more and more Americans getting vaccinated and warm Summer weather on our minds, the economy is starting to heat up as well. The more we recover and the faster the economy grows, mortgage rates will most likely rise quicker, so now may be your best chance to lock in a lower rate.

If you are a current or potential homeowner trying to figure out if now is the right time to refinance your mortgage or make a purchase, here are some key factors you should keep in mind as the state of the market becomes more and more apparent.


Unemployment Rate


The recovering economy could increase mortgage rates as more people return to work from the pandemic. The unemployment rate has been hovering around 4% and is forecasted to dip below 4% in the coming months, but a lower rate could mean bad news for the housing market.


Inflation Rate


Inflation rates in the US have accelerated to 7.5%, the highest since February of 1982 and well above market forecasts of 7.3%, as soaring energy costs, labor shortages, and supply disruptions coupled with solid demand weigh on the economy.


Retail Sales


More people working and fewer in-person business restrictions will likely lead to a spike in retail sales, which typically translates to higher mortgage rates.


GDP Growth


The US GDP growth accelerated in the fourth quarter of 2021, growing at a 6.9 percent annual growth rate, an increase from the pace of growth over the previous four quarters as the economy continues to recover from the effects of the COVID-19 pandemic. Personal consumption increased 3.3%, pushed higher by a 4.7% surge in services spending, namely health care, recreation, and transportation.


Mortgage Rates


It’s somewhat bittersweet that as our economy recovers from COVID-19, mortgage rates increase and make it harder for people to get involved in the housing market. The interest rate on the most popular U.S. home loan surged last week, shooting above the 4% level for the first time since 2019, as financial markets anticipate that the Federal Reserve will respond to the highest inflation in a generation.

While now is undoubtedly an excellent time to look at refinancing or taking out a mortgage to purchase a home, your window to invest isn’t necessarily too narrow. Most economists agree that mortgage rates will increase further in 2022, with rates ending the year between 3.5% and 4%. If you’re among the millions of Americans getting back on their financial feet, don’t worry too much about the housing markets. Stay on course and focus on recovering your finances, and you’ll likely still have access to low rates when that time comes.

Trying to figure out the opportune time to get involved in the housing market can be tricky, but thankfully that’s not a route you have to navigate alone. Financial advisors and our lending experts can work with you and help to plot a financial course for the housing market that makes the most sense for your needs.

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