Mortgage Rates On The Rise - Blame The Improving U.S. Economygreenspun.com : LUSENET : Unk's Troll-free Private Saloon : One Thread
Whew - looks like I got in just under the wire ;o) (just refinanced) --------- Mortgage rates climb out of cellar Fri Mar 15, 7:06 AM ET Thomas A. Fogarty USA TODAY
Historic low mortgage interest rates are fading in the rearview mirror. Blame an improving U.S. economy.
Mortgage investment giant Freddie Mac reported Thursday that the average 30-year home financing this week carries a 7.08% interest rate. It's the first time in five weeks the rate has ticked above 7%. And it's a long way from early November, when the rate sank to 6.45%, a three-decade low.
Experts say borrowers should expect modestly higher mortgage rates for the rest of 2002.
Keith Gumbinger of mortgage tracker HSH Associates says the 30-year rate may spike briefly to 8% this year. Says Gumbinger: ''If I were planning to buy a house next summer, I'd use 7.5% as my working number.''
Reacting largely to positive economic news, bond traders pushed the yield on the 10-year Treasury note Thursday to 5.41%, an eight-month high. Driving the increase is a string of favorable economic indicators that suggest an expanding economy, declining unemployment and improving productivity.
Freddie Mac economist Robert Van Order says bond traders appear confident that inflation is under control. As a result, he says, mortgage rates are likely to increase gradually. Van Order looks for the 30-year mortgage rate to remain under 7.5% for the balance of 2002. But even a gentle rise in mortgage rates will have consequences. Among them:
* A decline in mortgage refinancing. The Mortgage Bankers Association of America reported a 24% decline last week from the previous week in applications for refinancing.
* Fewer home sales. Freddie Mac's Van Order says the record high sales volumes for new and existing homes in 2001 are unlikely to be topped this year.
* More adjustable rate mortgages. More borrowers will be willing to trade the security of a fixed interest rate for lower initial financing costs.
-- (email@example.com), March 16, 2002
After 15 years of paying out, my wife and I just paid off the mortgage last month. The only problem was, it came in the midst of so many distractions that we couldn't draw breath long enough for a proper celebration. But, oh my, it feels good to own our home outright! Maybe sometime this year it will really sink in.
-- Little Nipper (firstname.lastname@example.org), March 17, 2002.
Congratulations, LN. That must be a glorious feeling. Unfortunately, I have about 30 years to go. :o|
-- (email@example.com), March 26, 2002.