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Real Estate Trends: Why Are Mortgage Rates Going Up In November 2022?




Key Takeaways

  • Average mortgage rate currently stands at 6.95% for a 30-year loan and 6.29% for a 15-year loan.
  • Experts believe mortgage rates will be contained to a narrow window as we move into 2023.
  • If you are considering buying a home, make certain you can afford it, and plan to stay in the house so you don’t lose money.

Many people are sitting on the sidelines wondering if now is the time to buy a house. They want to know if mortgage rates will continue to climb higher. Here is where mortgage rates are today and where experts believe they will be heading in the months ahead.

Higher rates in response to high inflation

Inflation escalated in early 2022, with gasoline prices spiking, housing prices reaching unprecedented levels, and a sharp increase in grocery prices. Consumers bought less and dug deeper into their pockets to pay for their daily needs.


The truth is the Federal Reserve saw higher inflation back in 2021. However, they thought the inflationary environment was temporary due primarily to supply chain issues caused by the pandemic. While the disruptions in the supply chain were an important factor, it was not the only one.

Government spending and the Russia-Ukraine conflict also played a role. Add in the fact that China continues to lock down due to its zero-COVID policy, and inflation is here to stay. In response, the Federal Reserve started a series of interest rate hikes to combat inflation and reduce the amount of money circulating in the economy.

On the surface, raising interest rates to draw cash out of the economy seems like an odd move. It only serves to cause financial pain for consumers and businesses alike. However, inflation would have only worsened if the Federal Reserve had not started raising interest rates. It would have made it even harder for people to buy necessary and discretionary goods. Drawing money out of the economy puts pressure on manufacturers to reduce prices and restore affordability.

With that said, the Federal Reserve is running the risk of creating a recessionary environment, as keeping interest rates too high for too long can lead to job losses. This could cause even more pain, as an increase in unemployment may lead to a significant drop in housing prices and defaults on loans like auto loans and mortgages.

Yet if the Fed feels that the increase in interest rates isn’t doing enough to slow down inflation, it may decide to continue raising interest rates after its November meeting.

November Federal Reserve meeting

On November 2, 2022, the Federal Reserve raised interest rates by 75 basis points or three-quarters of one percent. This brings the current target range to 3.75% and 4%. The stock market and economists were expecting this level of increase, so it was not a shock to the system. However, Fed Chairman Jerome Powell did hint at the potential of slowing down the rate of future increases. Put simply, this means that smaller rate hikes could be a possibility, but a complete pausing of hikes is unlikely.

The only way the Fed will pause rate hikes or even consider lowering rates is if the economy shows definitive signs it’s being effected the way the Fed wants. The Fed’s goal is for inflation to return to an annual range between 2-3%.

How much higher will mortgage rates go?

The average interest rate for a 30-year fixed mortgage is 6.95%, and the average interest rate for a 15-year fixed mortgage is 6.29% as of the beginning of November 2022. Many economists believe mortgage rates will remain in the 7% range for the remainder of 2022.

However, this all depends on how aggressive the Federal Reserve is. If they slow down the pace of increases, 7% could be expected well into 2023. However, if they pause or lower rates, mortgage rates could fall below 7%. Finally, if they see signs inflation remains out of control and raises rates by 75 basis points or more, mortgages could exceed 8%.

What should home buyers do?

It’s difficult to time the market, but that’s especially true for the housing market. No one wants to feel like they paid too much for their home, yet buying a home is a major life decision that provides a feeling of security and stability.

Should potential homebuyers wait for housing prices to decline, or should they find the house that works for them and refinance when interest rates go lower? The final decision comes down to doing what makes sense for the homebuyer, but some buying strategies make it easier to know when to buy.

Set a Maximum Purchase Amount

Staying within your means is an essential strategy for keeping your payments affordable. You may have to buy less house or rent for longer, but you won’t become ‘house poor.’ The term ‘house poor’ refers to getting into a financial situation where the mortgage and property taxes eat up more of your income than is sustainable. Most estimates suggest not letting your mortgage exceed 28% of your gross monthly income. Don’t buy a house that’s out of comfortable financial reach.

Buy now, refinance later

Sometimes you need to buy, and the market conditions don’t matter. Go ahead and buy a home, provided you can afford the mortgage and related costs without straining your budget. Interest rates will eventually fall, and you can refinance the mortgage for a lower interest rate when that happens. Make sure to refinance to the shortest loan possible, otherwise, you risk paying more in interest over the life of the loan.

Wait until mortgage rates drop

This strategy is best for those in a stable living situation who can handle rent increases until the time is right to buy. Even though many see rent as throwing money away, it also means a roof over your head until you can plan your next best move. Keep an eye on interest rates and housing prices in the meantime, and be ready to move quickly when you find a house at a price you like and interest rates are lower.

Buy if You Plan to Stay

With the risk of falling housing prices, you want to ensure you will live in the house you buy for at least five years. This will lower the chance that you lose money if prices decline. If you are unsure you will own a home for that long, you are better off renting for now.

Bottom Line

Overall, economists don’t believe there will be a radical move toward higher or lower mortgage rates soon. You can expect them to remain around 7% for the foreseeable future. Because of this, you need to take some time to decide if now is the right time for you to buy a home or if renting makes more sense.

What you should not do is wait for a housing crash. While there is always a chance of this happening, the odds are slim. 2008 was the only time that housing prices fell significantly. In all other recessions, home price gains slowed but they did continue upward. Of course, your area could experience a slight decline while other parts of the nation see increases. However, you most likely won’t see a major decrease in prices.

While you’re waiting for just the right house to come around, it’s good to stay in the other markets, as long as you stay relatively liquid. takes the guesswork out of investing.

Our artificial intelligence scours the markets for the best investments for all manner of risk tolerances and economic situations. Then, it bundles them up in handy Investment Kits that make investing simple and – dare we say it – fun.

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Piles of commercial-real-estate loans at banks may be worth just 77 cents on the dollar — if that



The swift collapse of Silicon Valley Bank earlier in March put a spotlight on potentially painful losses lurking at banks from trillions of dollars in commercial-real-estate loans on their books.

It also sparked debate over what piles of older loans on commercial properties might be worth now that low interest rates and peak real-estate prices have vanished, and as stress in the banking system makes credit more scarce.

The sale of $72 billion in assets from the failed Silicon Valley Bank by regulators at a $16.5 billion discount, which pencils out to about 77 cents on the dollar, offers a glimpse into a new clearing price for commercial-real-estate loans.

“The way I look at it is: [that] the Silicon Valley Bank trade created a baseline for the market,” David Blatt, chief executive at CapStack Partners, a credit fund that buys commercial-real-estate loans from banks and originates short-term bridge loans and mezzanine debt.


“To me, that’s the top end, not the bottom end, for commercial-real-estate loans,” said Blatt, who studied the bank’s loan exposure.

Unlike stocks or bonds, loans in the estimated $5.5 trillion commercial-property market don’t sell in a transparent way, which means pegging their values can be difficult.

To be sure, not all of the sold assets of Silicon Valley Bank were related to commercial real estate. The bank reported about $13 billion of real-estate exposure at the end of 2022, according to a quarterly filing, which categorized about $2.6 billion as loans on commercial real estate.

Still, Blatt and other commercial-real-estate veterans steeped in previous bank-failure cycles told MarketWatch the sale provides a “mark” in terms of where loans actually changed hands in the wake of two regional-bank failures.

​”Everybody is dusting off their old playbook,” said Jack Mullen, founder of Summer Street Advisors, a commercial-real-estate advisory firm that’s been involved in multibillion-dollar workouts. “There just hasn’t been much distress for years.”

Toll of higher rates

As with bonds, the Federal Reserve’s rapid pace of interest-rate hikes has cut the value of older, low-coupon commercial-real-estate loans. Mullen ​said recent bank failures also make it harder for banks to “sweep it all under the rug,” which ​likely means more loan sales by banks.

“People are not going to let it carry into next year,” he said. “On the regulatory side, it’s coming right to the front of the line. People are supermindful of it.”

Richard Hill, head of real-estate strategy and research at Cohen & Steers, recently argued in a report that while banks hold an estimated 45% of all commercial mortgages, the debt isn’t a systemic risk for banks.

“We previously argued that [a decline of 10% to 20% in commercial-property prices] was reasonable to expect, and we now believe it could be 20–25%,” Hill wrote. He also said higher loan standards in the wake of the 2007–08 global financial crisis can provide lenders a cushion if property values fall.

In the reeling office sector, however, the value of older office buildings in Manhattan could tumble 70%, said Stijn Van Nieuwerburgh, a professor of real estate and finance at Columbia University’s business school, in a talk Thursday about turning older offices into homes hosted by the Volcker Alliance.

“Forty percent of that is just coming from interest rates alone,” Van Nieuwerburgh said, adding that remote work, current regulations and other pressures on the office-building market contribute to the value drop.

Write-down implied

Real-estate investors also will be watching the sale of $60 billion of Signature Bank loans. Newmark Group Inc. was hired to market the assets from the failed bank that were excluded in a previous sale of its holdings.

“What everybody has been operating under is this hold-to-maturity veneer,” Blatt said of banks that have continued to value loans at 100 cents on the dollar, or par.

“There’s just no way these things get resolved at par,” Blatt said. With the discounted sale of Silicon Valley assets, “the write-down is kind of implied.”


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The spring housing market could bring a reckoning for realtors in Canada



Realtors’ fate depends on whether buyers and sellers return in force and how that will affect prices

At the height of the COVID-19 pandemic, when many of her peers were binge watching Netflix shows, Toronto’s Sewit Tamene decided she would finish getting her real estate licence, a process she had started almost a decade earlier.

But by the time she completed the program in September 2022, the booming pandemic housing market had started to turn cold, with sales and new listings on the decline and prices rolling over, too. For Tamene, the timing was bad, but at least she still had a full-time job elsewhere. For her friends trying to launch careers in the industry, the transition has been more difficult.


“Maybe if they already had a history and they already had a client base and they were already sort of successful, it wouldn’t be hitting them as hard — but if you’re a newer agent, I definitely think that it’s a little bit more difficult to get going,” Tamene said. “Some realtors are definitely taking a pause or leaving the industry because there’s just not enough cake for everyone.”

The pressure on a swelling real estate profession — membership at the Canadian Real Estate Association (CREA) has risen 17 per since the end of 2020 to 160,000 while the number of brokers and salespeople represented by the Toronto Regional Real Estate Board is up 25 per cent since March 2020 — is just one of the storylines making this spring’s real estate market a make-or-break affair.

There’s just not enough cake for everyone

Sewit Tamene

The big questions, the ones that will decide realtors’ fates, are whether buyers and sellers return in force and how that will affect prices.

The Bank of Canada’s dramatic interest rate hikes over the past year have reshaped lending markets, making homes even less affordable and pushing many would-be homebuyers to the sidelines.

Figures released by CREA on March 15 show that actual (non-seasonally adjusted) transactions in February 2023 came in 40 per cent below a strong February 2022. New listings also continued to fall in February 2023, decreasing by 7.9 per cent month over month and hitting record lows in some cities, including Calgary.

Prices, too, have come under pressure. The composite benchmark price for a home in the Greater Toronto Area (GTA) peaked at $1,370,000 in March of 2022, according to figures from TRREB, but as of February were down 18 per cent from there. Vancouver’s price decline has been steeper, according to the region’s real estate board, off 20 per cent from a high of $1,374,500 last April.

Industry observers have suggested the usually busy spring market might be the turning point that lures buyers and sellers back into the game, but that is hardly assured, and just where the balance of supply and demand lands will have significant consequences for the industry and the economy.

Homes in Toronto.
Homes in Toronto. Photo by Cole Burston/Bloomberg

John Pasalis, president and broker of record at Toronto real estate brokerage, Realosophy, thinks demand has the upper hand. He said his brokerage has had lots of showings recently and that sales are growing faster than inventory. That is keeping the bidding process competitive and maintaining price levels, something he doesn’t see changing.

“We need to not just see a seasonal increase (in listings), but we need to see a big increase in the number of people coming on the market to sell — and we don’t know if that’s going to happen, to be honest with you,” Pasalis said. “We’ll probably see some increase but I’m not sure if we’re going to see the level we need to bring a bit more balance to the market. And by balance, I mean, fewer bidding wars, homes sitting on the market a little bit longer.”

Pritesh Parekh, a Toronto realtor, said that while the lack of listings may be supporting prices, it is limiting the options for buyers.

“If a realtor is representing a buyer in this market, they’re definitely feeling the pressure of even finding homes that are suitable,” Parekh said. “And when they finally do find a property — and I’m talking more so houses than condos in this specific example — there are so many other buyers that are looking at that same home.”

For realtors, Parekh said the market has shifted dramatically since 2021, when one didn’t have to be working full time to make ends meet.

“It was a market where properties were selling quickly and selling for high prices,” he said. “Part-timers doing lower volume sales or staying afloat based on the reality that there was a lot of business to go around, were selling properties relatively easily.”

There is less business to go around for real estate agents these days.
There is less business to go around for real estate agents these days. Photo by Ty Wright/Bloomberg

Then, the market was buzzing from the Bank of Canada’s emergency interest rate cuts, sparked by the COVID-19 pandemic. The overnight rate sat at 0.25 per cent for all of 2021. A previously hot market seemingly got hotter that year.

“Properties were selling without being staged, without having repairs — even properties that had negative attributes were still selling at prices people couldn’t believe,” Parekh said.

As the Bank of Canada tightened monetary policy, the market thinned out and the “anything goes” mentality disappeared with it.

Parekh thinks this spring will show that buyers and sellers are tired of playing the waiting game.

“There were so many people who were looking to buy last year,” Parekh said. “And once prices started going down, they held off to see what happens next. There are still people in the market who have been waiting since last year, and at this point there’s going to be a segment of them who are tired of waiting and say, ‘You know what, I’m ready to pull the trigger.’”

A sold sign outside a home in Vancouver.
A sold sign outside a home in Vancouver. Photo by Richard Lam/PNG

Adil Dinani, a realtor with Royal LePage West in Vancouver, has been selling real estate for 17 years and has seen three major market corrections. He said he is optimistic about the spring market and believes that “the worst is behind us.”

According to Dinani, entry-level price points of the Vancouver market are very active right now.

But he thinks a reckoning may be ahead for the industry, with less-established agents being winnowed out over the next few years.

“I think real estate practitioners need to work to provide value, to display market knowledge and really understand what’s happening out there (in real estate) because it’s a confusing time,” Dinani said. “If you’re a first-time buyer and rates are five and a half, six per cent, and prices have come down but not that much — you want to know where the opportunities in the market are.”

In spite of the uncertainty, Tamene is optimistic the market will bounce back.

“Things have been slower these past few months which can be discouraging,” she said. “I’m not a gambler but if I were placing a bet on Toronto and its real estate market, I’m going all in because that’s how confident I am that things will turn around.”


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European real estate stocks hammered by banking turmoil



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