Mortgage Interest Rates in 2022: Is It Too Late to Buy or Refinance?

Two years after the coronavirus (COVID-19) pandemic began impacting us here in the U.S., we can look back and see how much things have changed. While many of us may have experienced personal difficulties, the global and national economies have been on rollercoaster rides of their own. Many of us have heard how, in 2021, interest rates hit historic lows.

As 2022 begins, interest rates are beginning to rise once again. What if you wanted to buy a home or refinance your home this year? Do the rising interest rates mean it’s too late for you? 

Keep reading to learn more about historic interest rates, 2022’s rates, and whether you should still consider buying or refinancing.

Taking a Look Back at Historical Interest Rates

Today’s average interest rate for a 30-year fixed mortgage is hovering near 4%. If you compare that with last year’s average, it’s one full percentage point higher -- 2021’s average was 2.96%.

For some homebuyers and homeowners, this could be enough to scare them away from a purchase or a refinance. Now, let’s take a look at the historical rates over the past four decades.

When looking at the past four decades, even a mortgage rate near 4% would be the 7th-lowest rate since 1980. For many people, this low rate may not be a large enough difference from last year’s historic lows to put them off entirely from their home buying or refinancing plans.

Putting 2022 into Context

Interest rates are still under 4% for now. But it’s only the beginning of the year. And unfortunately, there’s no guarantee they will stay that way throughout the rest of the year. But should you be worried about 2022’s interest rates? And what about rising home values?

If you saw how low interest rates were in 2021, you probably also saw how much home values have risen. And it’s true that home values have risen -- in some cases, exponentially -- over the past couple of years. 

But let’s take a look at 2022’s home prices compared to those in the 1980s and 1990s. While homes may have been less expensive decades ago, for many people, it may actually be cheaper to buy a home now than it was back then.

Consider the average income compared to the price of a home. In 1981, for example, the average household income was $22,390, or $1,856 per month. The average monthly mortgage payment in 1981 was $1,558.58, or 84% of the household income, with interest rates as high as 18.63% that year.

In 2021, on the other hand, the average household income was $79,900, or $6,658 per month. The average mortgage payment was $1,100, or 17% of the household income.

Property values may be at an all-time high. But that doesn’t have to mean that the cost of buying a home is at an all-time high -- regardless of the increasing interest rates.

Is It Too Late to Buy a Home or Refinance?

If you’re worried about it being too late to buy a new home or refinance your mortgage on your existing one, it’s not too late. But keep in mind that no one knows for sure what the interest rates are going to do throughout the rest of the year. With that being said, it’s best to get started with the process as soon as possible.

This can help you avoid the rates increasing too much more than they already have. And it means you can save as much money as possible.

As a review, refinancing can help you lower the interest rate you have on your existing mortgage by replacing it with a brand new one. You can also renegotiate the life of the loan or obtain terms that are more favorable to you as the borrower. In this case, you may opt for a “rate-and-term” refinance.

On the other hand, if you’re more interested in getting cash back to make home improvements, take a vacation, or pay off debt, you might want to consider a “cash-out” refinance. 

How Armed Forces Bank Can Help with Your Refinance

While property values are up and interest rates are still low, it’s the perfect time to consider using a cash-out refinance to unlock the equity in your home and pay off other debt. 

At Armed Forces Bank, you can access up to 100% LTV (Loan-to-Value) on your VA Loan and put that cash to use.*

*Subject to credit approval. VA funding fee may apply.  VA loans are offered exclusively to qualified Military Service Members.  100% Loan-to-Value on VA Loans only.  Additional restrictions may apply.

You can refinance to a lower payment and even shorten your payoff term. Refinancing can also unlock equity in your home so you can cash out and make home improvements, pay off debt, or apply funds to other expenses.  

Our dedicated mortgage loan advisors are experts at refinancing and are here to help you every step of the way. Let an Armed Forces Bank loan expert review your current mortgage and guide you through the refinance process. 

If you’re refinancing, we can help you refinance to get:

  • Better terms and rates
  • The opportunity to cash out
  • Fixed and adjustable rates available.
  • Dedicated loan advisor to help you every step of the way

*Subject to credit approval. VA funding fee may apply. VA loan qualification guidelines apply. VA loans are offered exclusively to qualified Military Service Members. 100% Loan-to-Value on VA Loans only. Additional Restrictions apply.

If you’re a homebuyer, we offer these types of mortgages: 

  • FHA Loans: A loan designed for first-time homebuyers and step-up borrowers
  • VA Loans: A loan offered exclusively to military service members, both active and retired
  • Conventional Loans: Fixed and adjustable-rate mortgages available
  • Jumbo Loans: For mortgages with a loan amount that exceeds $548,520
  • Hero Loans: A loan with $0 down payment offered exclusively to first responders

Whether you’re looking for a home loan or want to refinance, our loan advisors can help you through the entire process. Get in touch with one of them today.

And don’t forget to capitalize on those low interest rates before they increase.

Armed Forces Bank Is Here for You

No matter where in the world your financial journey takes you, Armed Forces Bank is here for you. We offer convenient options to help our valued service members and their families stay in control of their finances with dedicated experts by their sides.

Learn more about our mortgage options*. 


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*Subject to credit approval.