Mortgage rates – Predicted to increase of 1 per cent by end of 2022

Mortgage rates – Predicted to increase of 1 per cent by end of 2022

Increments – sometimes they bring excitement, especially where salaries or deposit interest rates are concerned.  At other times, they are met with disappointment, where loan or mortgage interest rates apply. CalgaryMortgages provide one great solution!

Unfortunately, the latter seems to be the case where an increase is predicted in mortgage rates in 2022.   Although house prices are still high, as estate agents in Gloucestershire will testify, the demand for property and mortgage deals is also on the rise. 

We will try and explain why the titled prediction of mortgage rates increasing in 2022 has been foretold and also why the predicted increase will not be very substantial.

The pandemic affected so many aspects of the world, including the financial sector. Interest rates were brought right down, to deal with the crisis and to accommodate first time and other buyers with attractive, fixed low mortgage rates. 

The stamp duty land tax holiday and subsequent low mortgage deals also encouraged heaps of people to take advantage of the offers and invest in new homes and properties.

Base interest rate:  

The Bank of England has maintained its base interest rate at a low of 0.1%, which has enabled many lenders to offer attractive mortgage deals and buyers to take advantage of them, which in turn has led to an increase in house prices.  

However, with inflation skyrocketing, it is likely that the base interest rate will be forced to increase.  This is likely to happen in the following year.  Once this takes place, it will lead to an increase in mortgage rates as well. 

CPI – Consumer Price Index: 

Is based on a comparison of the cost of items a year ago with the current cost.  CPI contributes to the measure of inflation.  The reported CPI inflation from September to October 2021 was higher than expected.  With such a high rise in this inflation – the highest since 2011 – it will have its effect on mortgage interest rates also. 

End of the SDLT holiday: 

The final phasing out of the Stamp Duty Land Tax holiday ended with effect from 01 October 2021.  With the consequent return to normal of stamp duty land tax, many attractive mortgage deals were withdrawn.  New deals with higher interest rate offers have been put on the market and this is likely to continue in 2022 as well.

Supply versus Demand: 

As with every facility, as long as the demand exceeds the supply, the market will prosper.  This is the case with the property market.  The supply still lacks grossly against the demand.  This is more so because the lockdowns caused by the pandemic have led to many people working from home.  Some continue to do so, even though most offices have reopened. 

The “working online from home” concept has caused many people to look for a change in lifestyle, with larger, spacious independent accommodation, including outdoor space for relaxation,  compared with living in space-restricted apartments.  This continuing trend is also having its effect on mortgage rates and house prices.

Economy returning to normal: 

With the successful processing of the Covid vaccination programme and return of life to near normal, the economy is fast improving.  This means that there is likely to be an increase in interest rates.  For savers, this will be a positive, but not so for the borrowers, whose mortgage rates will rise and become more expensive.

Slight and gradual increase in rates: 

However, one positive point is that even though rates are likely to rise in 2022, the increment will not be substantial and will probably be phased out. 

This is predicted taking into consideration various factors – previous recessions, economic shocks, possible repossessions, avoidance of pressure on businesses struggling to deal with less staff and raw materials, the termination of the furlough scheme and other reasons.  That is why an increase of only around 1 per cent has been predicted.


Despite all pointers leading to an increase in mortgage rates, a prediction is still just a forecast.  House prices were predicted to fall in 2021; on the contrary, they rose higher than ever. 

So, for all prospective buyers, while needing to be aware of the likely rise in mortgage rates, they should also be prepared for it to be gradual and spaced out.   A mortgage is usually a huge borrowing, repayable over decades. 

So even a slight change in the interest rate can tell on the repayments.  Fixed rate, long term loans seem to be a solution, as also remortgaging if done in time. 

Hence, it is recommended that the advice of a professional be taken when looking to obtain the best mortgage deals in a particular area, based on the above prediction.