Interest Rates Continue to Rise
Historically low mortgage rates over the past couple of months have not done much to encouraged new home sales, but rising rates could finally push those who have been “thinking about” buying into the market.
Rates this week and last surged to a six-month high after the President and congressional Republicans agreed to extend tax cuts for two years. Even though the deal is still being debated, the market interpreted the development as likely to accelerate the economic recovery.
The average rate for a 30-year fix loan increased to 4.61% in the week ended last Thursday from 4.46% the previous week, this was the fourth week of increases. The average 15-year rate rose to 3.96% from 3.81%. These rates are the highest they’ve been since June.
Even though borrowing costs for new home loans have been cheap over the course of the past 6 months, they haven’t spurred the kind of home buying that one would expect. In addition, lower rates haven’t encouraged much refinancing, since many homes today are valued at less than what they owe on their mortgages. The latest Case Schiller report stated that home prices nationwide declined 2% during the three months ending in September, after rising 2.4% during the previous quarter.
Rising rates would seem to make housing matters worse, but there’s a glimmer of hope that the opposite will occur. Those buyers who have been eyeing new homes may finally pull the trigger once they realize that rates are heading north again. After all, borrowing is still cheap, and it’s best to lock in rates today instead of waiting to see what happens tomorrow!
Lindsay Annett Shapiro, Team Annett – firstname.lastname@example.org 513-527-3060 – C incinnati, OH
Team Annett Office