Source: The Motley Fool—
The past couple of years have been anything but ordinary for real estate investments. Last year, in response to the COVID-19 pandemic slowdown, the Federal Reserve slashed interest rates to record lows and mortgage rates followed. Many mortgage-finance companies felt the tailwinds from these low rates, and customers responded by refinancing their mortgages at a record pace.
Now, accelerating inflation has caused the Fed to shift course, which could have a sizable impact on real estate and mortgage-finance companies. Here are four trends in real estate that smart investors are keeping a close eye on going into 2022.
1. Mortgage rates will rise
Economists expect mortgage rates to rise as the Fed tightens monetary policy. The Fed has decided it needs to respond to rising inflation, which recently came in at a 6.8% annual rate in November, the highest since 1982. At the same time, the unemployment rate has dropped drastically — down to 4.2% as of November.