Today, 6/27/2013 Freddie Mac reported that the average mortgage interest rate for 30 year fixed-rate mortgage was 4.46% up from 3.93% last week. The average interest rate for 15 year fixed-rate mortgages was 3.50%, up from 3.04% last week. A year ago the 30 year rate was 3.66%.
Yesterday, I posted that this huge leap in rates was not unexpected and had been rumored since very late last week. If you recall, last week there was no "commentary" from a Freddie Mac spokesperson, as had always been the case. Even right now, last weeks press release has no commentary. Makes you wonder if this leap in rates was even being seen at the same time that Freddie Mac was reporting a slight drop in rates last Thursday.
What does this mean? It means that if you did not take advantage of the rates when they were in around 3.50%, you may have missed the boat. While 4.5% is still a historically low level, the costs for monthly payments and the overall costs over the life of the loan could be significant to borrowers.
Not only that, but when a buyer goes to get approved for a loan, that higher interest rate will likely mean that he/she will qualify for a lower amount now. So instead of getting that 4 bedroom/3 bath home, he/she may have to settle for a smaller 3 bedroom/2 bath home with a smaller price tag. The higher the interest rate, the less home you can buy if you are financing.
And keep in mind that reports in the news, and what we are seeing here "on the ground", indicates that inventories are getting smaller. That is good news for sellers since it stablizes home prices and can even make them rise. Of course, for buyers, that is the other shoe that is dropping. Higher prices + higher mortgage rates means you will have to pay more for that home you wanted. Those buyers who jumped off the fence in the past took advantage of a nearly perfect time to buy. Those who did not, are still not that bad off, but recent trends indicate that to continue to delay could make the cost of a home purchase even harder to swallow. I would give this some serious thought if I were you. Freddie Mac and other experts expect the housing market to remain strong, even with higher rates and prices.
Freddie Mac's Vice President said, "Following Fed chief Bernanke's remarks on June 19th about the possible timing of reduced bond purchases, Treasury bond yields jumped over the week and mortgage rates followed. He indicated that the Fed may moderate the pace of its buying later this year and end the purchases around the middle of 2014.
"Higher mortgage rates may dampen some housing market activity but the effect will be muted by the high level of buyer affordability, and home sales should remain strong. For instance, existing home sales in May rose to its strongest pace since November 2009 and new home sales were the most seen since July 2008. In addition, the 12-month growth in the S&P/Case-Shiller 20-city home price index for April of 12.1 percent was the largest since April 2006."
Do keep in mind that we are a very large country, So figures that come out for the entire nation, may have little or no relevance for your particular area. In the end, it is best if you speak with a local REALTOR or financing expert to see what the situation is for your part of the United States. Florida is not Michigan, nor is Maine the same as California. Market conditions can be very different from place-to-place. Also, your own credit history, the property you want to buy, etc. will effect your specific loan options and interest rates. Your mortgage broker or bank loan officer can give you more specific information.
If you want to learn more about Freddie Mac or see the details of their survey, go to:
www.freddiemac.com and click on the link for "Current Weekly Survey". They break down the survey by specific regions in the United States so you can see how your state compares to other parts of the country. They also explain the mission of Freddie Mac and offer a lot of useful information for consumers.
If you would like to speak with a local lender you can find several at my website: www.jelwell.century21bnr.com
You can also contact your own bank, credit union, or mortgage broker to see what your particular interest rate would be, should you decide to finance a home purchase.
I would also be happy to assist you in any way that I can. Just call JOHN ELWELL - REALTOR at CENTURY 21 Bill Nye Realty, Inc. : 813-783-4444 or e-mail me at: [email protected] You are also welcome at my webpage: www.jelwell.century21bnr.com Licensed in Florida.