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Federal Reserve Building in Washington, D.C. Federal Reserve Building in Washington, D.C. (Source: Shutterstock)

A Mortgage Bankers Association economist said Wednesday that the Fed’s decision to act more aggressively to curb inflation will send long-term rates up, but the increase is already baked into its forecast for mortgage rates over the next 12 months.

MBA Chief Economist Mike Fratantoni said the Fed’s purchases of longer-term Treasuries and mortgage-backed securities have kept mortgage rates lower than they otherwise would have been. However, even with the Fed’s new stance, he said he expects the MBA’s last forecast is still on target, with 30-year rates rising to 4% by the end of 2022. But he also said rates “may be more volatile as the Fed backs away from the market.”

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Jim DuPlessis

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