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Information and forecasts on mortgage rates
According to mortgage financier Freddie Mac, long-term mortgage interest rates remained at historic levels for 2015. The July of this year was the first in which interest rates for the whole months since September 2014 exceeded 4 per cent. In the first weeks of July, interest rates rose to a new high for the year.
A 30-year fixed-rate mortgage (FRM) had an interest of 4.08 per cent without charges, compared to 4.02 per cent at the end of June. FRM, the 15-year-old, rose to an annual 3.24 per cent median of 3.21 per cent and ARM, the one-year floating mortgage, rose to 2.52 per cent from 2.50 per cent.
The vacation rates decreased again in the Independence Day weekend. FRM's 30 year FRM median decreased to 4.04 per cent, FRM's 15 year FRM median decreased to 3.20 per cent and ARM's 1 year ARM median decreased to 2.50 per cent. Next weekend saw another all-time high for 2015. FRM's 30-year yo-yoed FRM return up to 4.09 per cent, while FRM's 15-year rose to 3.25 per cent.
However, the one-year ARM ratio remained stable at 2.50 per cent. In the following weeks, interest rates dropped again, with the average interest rates on the 30-year-old FRMs standing at 3.04 per cent. FRM, which is 15 years old, dropped to 3.21 per cent and the one-year ARM ratio rose to 2.54 per cent. Although the business community has not provided excellent reporting, there have been enough positives to justify the Federal Reserve's commitments to raise interest rates by the end of 2015.
Enthusiasm about increasing Fed interest rates may be mitigated by external pressures (e.g. Greece?s Finanzstatus ), but the general tendency will persist. The rates are likely to exceed 4 per cent for the time being.
Mortgages rates reached a four-year high, and add to the worries of home buyers.
The mortgage rates are climbing - almost to a four-year high - a tendency that is likely to cause the already enormous challenge of purchasing a house in the Bay Area another headache. According to Freddie Mac, the interest rates on a 30-year fixed-rate mortgage have risen by almost half a per cent since the beginning of the year, and some analysts anticipate that they will continue to do so.
Although rates are still low at 4.38 per cent, this recent rise could make it even more difficult for young or low-income home shoppers to buy the home they want. While mortgage rates are rising and force prospective home purchasers to paying more interest, their purchasing power is declining, Espinosa said.
All of a sudden they can no longer qualify both for the loans they need to buy their dream home, he said. In the long run, however, increasing interest rates could lead to some easing of the strained residential property markets in the Bay Area. While the push into rates out borders shoppers who previously could hardly afford a home just here, the demand for houses that could help curb the region's pass-through prices is going down.
However, for the Bay Area to see any effect, mortgage rates must continue to rise much further, said Dick Lepre, a Senior Credit Advisor for RPM Mortgage. When rates are increasing another half per cent, it might be slowing the pace at which house prices are rising, he said. When interest rates rise by a full percentage point, house values could level off.
It attributes the recent rise in mortgage rates to a boom economic environment that has triggered concerns about price increases. In January, the USA created 200,000 new workplaces, while joblessness stayed stable at 4.1 per cent, according to the latest figures from the U.S. Bureau of Labor Statistics. Nevertheless, mortgage rates are still much lower than the past has seen the mortgage markets.
Ten years ago the rates attained more than 6.6 per cent, according to Freddie Mac. Prior to rising to 4.38 per cent last weekend, interest rates on traditional 30-year fixed-rate debt rose to a peak of 4.41 per cent in April 2014. In order to buy a home in the costly Bay Area, many home purchasers are taking out "jumbo mortgages" - more than $679,650 in credit - which generally have lower interest rates than other mortgage types, Lepre said.
This new increase could give some prospective vendors cool-heads, as they are worried that they will loose their low mortgage rates when they buy a new home, Espinosa said. Spain forecasts that mortgage rates will continue to increase, reaching 5 per cent or more by the end of the year. In this sense, he has an advisory service for prospective home buyers: