From the latimes.com:
Mortgage rates have risen half a percentage point since setting record lows last fall, and many economists expect them to continue rising for the foreseeable future.
The increase, a reaction to the improving economy and housing markets, could fuel already hot housing markets as potential home buyers look to seal a deal before rates rise any further.
“I think rates will drift slowly higher,” said economist Christopher Thornberg, head of the West L.A. consulting firm Beacon Economics. The increases might add as much as 1 percentage point to mortgage rates by the end of next year, he said. “But within these ranges, home prices are still cheap compared to incomes and apartments.”
In a weekly survey of what lenders are offering to solid borrowers, Freddie Mac reported Thursday that the average rate for a 30-year fixed loan rose from 3.59% last week to 3.81% early this week. It was the highest in more than a year, contrasting with the record low of 3.31% set last fall.
The rates remain extraordinarily low by historical standards. The typical rate exceeded 16% during inflationary times in 1981 and 1982, Freddie Mac’s records show, and the annual average topped 8% as recently as 2000.
The higher rates have arrived as rising home prices and the slowly improving economy also are delivering some good news for mortgage borrowers, who are being offered a wider range of loans on somewhat easier terms these days. That’s allowing buyers without 20% down payments to avoid private mortgage insurance, and family members to sign on as co-borrowers without living in the homes, mortgage brokers say.
Easing lending standards have made it more possible for homeowners to tap into their rising equity. And home equity lines of credit, hard to come by after the housing crash, are now offered again by many lenders reassured by recent increases in home prices.
More here:
http://www.latimes.com/business/realestate/la-fi-mortgage-rates-20130531,0,3499962.story
That’s NOT the reason rates are rising.
Bankrate.com plot of 30-year rates looks a little different. It shows a more aggressive increase in the last year:
http://www.bankrate.com/funnel/graph/default.aspx?cat=2&ids=1,-1&state=zz&d=365&t=MSLine&eco=-1
I think it is another head-fake and they’ll settle back down again later this year – maybe not to record lows but low enough to make those who panic-buy now unhappy.
But I do think rising rates at this time will fuel the market. It will add more pressure to buyers already under pressure to buy, close, and move before the school year.
@sduuuuude
“But I do think rising rates at this time will fuel the market. It will add more pressure to buyers already under pressure to buy, close, and move before the school year.”
agreed.
I think rising rates will encourage people who are finally above water to list their homes for sale. There are a lot of people in my County (Sonoma) who got variable rate loans and who ended up underwater. There’s VERY little inventory under $500k in my immediate area (Sebastopol)and the demand is high…If you can walk away with $25K-$50K in your pocket after all costs, you can’t afford a larger payment and you have been underwater it makes sense to sell now.