Mortgage Rates in 2022

The Federal Reserve executed the fastest monetary tightening since 1980, raising the fed funds rate from 0.25% to 4.5% in nine months (seven hikes including four consecutive 75-bp moves). QE ended and QT (balance sheet reduction) began in June.

CPI peaked at 9.1% in June — the highest since 1981. Surging energy (Russia/Ukraine war), food, and shelter costs drove the spike. The Fed's credibility was on the line.

Mortgage rates surged from 3.1% in January to 6.4% by December. The "lock-in effect" emerged: homeowners with 2.5–3% mortgages refused to sell, freezing inventory. Housing sales fell 35% from the 2021 peak. Prices fell modestly in some markets.