According to Freddie Mac, the average mortgage rate for a 30-year fixed period rose to 4.16 percent, compared to last week rate of 4.13 percent. However, a year ago, fixed-rate mortgage was around 3.97 percent.
Mortgage rates are rising steadily, but this is not something buyers should panic about because rates are still not too high. At the current rate of interest, buyers will pay $21 more each month when compared to the last year monthly payments.
“If you are serious about buying a home,” states Jason Walowitz of United Financial Counselors, “You should not be deterred from purchasing a home right now just from the current rate hike.”
Rates are still below 5%, which have been the norm for about a decade. However, in 1990 the average rate was 10.13% and in 1996, it was 5.67%. “We still have quite a ways to go for rates to be even close to average,” noted Len Kiefer, deputy chief economist for Freddie Mac.
In recent years, rising home prices with tight inventory and increased demand and have deterred buyers, however, the lower rate of interest helped temper that increase. Some, however, see the rate hike as more expensive and beyond their budget. While it is true that some buyers will unfortunately be pushed out of the marketplace, there will not be a significant change for many borrowers looking to purchase.
Kiefer said ” In 2017, home prices are expected to rise, but at a slower pace than a year ago. The supply is pretty low compared to demand and that will keep pressure on prices and rents.”
The buyers of San Franciso, Manhattan, and other expensive markets in the US will more be affected by the increase.
“Affordability is already difficult in some markets,” said Erin Lantz, vice president of mortgages for Zillow. “Rates can have more of an impact in those areas, but for most of the country, it’s still very affordable, by historical standards.”
The reason there may be a slight decrease in purchases is that a high fed rate makes it more costly for banks to borrow money, which could result in high credit card rates and house loans.
“The era of ultra-low interest rates is over,” said Lawrence Yun, chief economist of the National Association of Realtors, in a statement Wednesday. “[The] short-term rate hike will be followed by several additional rounds of increases in 2017 and 2018. Despite these moves, mortgage rates will not rise alarmingly.”
U.S mortgage rates are affected much by the bond market and other factors such as global economic fluctuations or uncertainties. “Global markets have sneezed and hiccupped and gone crazy at times and have driven down our interest rates,” said Gumbinger.
For instance, after the Brexit news, the rate of 30-year fixed mortgage dropped to the lowest level 3.48% since May 2013.
“Non-traditional mortgage products could start to creep back into the market as consumers search for more affordable options,” said Lantz.
For more information about purchasing a home and how rates may effect you and your family, please contact our office to set up an appointment. Be informed but do not let these hikes deter you from your goal of purchasing your dream home. We want our clients to be educated about the housing market so that we can provide you the best deal and the highest level of service when purchasing your home.