Sunday 24th of January 2021

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Mortgage Rates Starting to Inch Up

Although they remain at historical lows, interest rates for mortgages are beginning to creep upwards, pointing a signal to Americans that the time to refinance at preferable rates could be expiring.

According to a survey issued by Freddie Mac, mortgage rates did slightly rise during the week of October 11. Freddie Mac, one of the nation’s leaders in the mortgage industry, issues weekly reports that track activity in the mortgage marketplace.

But they’re still under 5 percent

But before you get too concerned, take a deep breath. According to the survey, while rates did rise a bit, the average rate for 30-year, fixed-rate mortgages stayed below 5 percent. And rates have been below 5 percent for three straight weeks.

The 30-year, fixed-rate mortgage is the industry standard, and is the product most consumers choose. Part of the nation’s mortgage meltdown was tied to short-term adjustable-rate mortgages that reset interest percentages after one or three years. By selecting a 30-year, fixed-rate loan, your mortgage rate will remain the same for the entire term of the loan (30 years).

According to Freddie Mac, the percentages for the 30-year fixed-rate loans rose to an average of 4.92 percent. The previous week, rates averaged 4.87%. And for reference, a year ago rates averaged 6.46 percent. The rates for 15-year fixed-rate mortgages – a favorite for people who are refinancing to much lower rates – were at a record low of 4.33 percent two weeks ago. They now average 4.37 percent – for perspective, they were at 6.14 percent a year ago.

Effect on the real estate market

Interest play a direct role on the real estate marketplace, and the ease with which many people can purchase a home. When interest percentages rises, it means mortgage payments rise along with them – and buyers will qualify for homes that cost less. But some studies recently released by industry leaders show that there are reasons to be optimistic that the real estate market is beginning to heal.

But according to a report from the Commerce department, sales of new homes have risen in each of the last five months. May experts point toward the federal government’s $8,000 tax credit for first-time home buyers as the reason for the rise in new-home sales. But the National Association of Realtors has also seen a trend, with pending home sales – those homes in escrow but that have not yet sold – have increased far beyond analyst predictions. In fact, those pending home sales are at the highest level in nearly two years.

Other financial news

In other financial news, the Denver Post reports that yields on Treasurys also rose – yet another signal that mortgage rates could be on the rise. According to the Post, the fall of Treasurys – to record low levels – hastened the dropping of mortgage rates. But the yields have rose over the last few weeks and could take us out of the historical low mortgage interest rates we’ve been enjoying for quite some time.