It’s been awhile since mortgage rates for a traditional 30-year fixed rate mortgage have been above the 4 percent mark, but it happened this past week. According to Freddie Mac, the average rate for a 30-year fixed rate mortgage is now at about 4.08 percent for well qualified buyers. That’s a 0.2 percent increase from the 3.88 percent that these mortgage rates stood at about two weeks ago.
The last time that mortgage rates for a 30-year fixed rate were above the 4 percent mark was in October of 2011. But don’t expect this increased rate to decrease the interest in the housing market which is starting to experience a resurgence, even if it is minimal. Although Freddie Mac expects these rates to increase to as much as 4.5 percent by the end of this year, the impact that the higher rates will have on the housing market will be tempered by several factors, including the following:
- The rates are still at historic lows. While these rates aren’t record lows, they are still much lower than they have been in years past. When you consider that the average mortgage rates were slightly above 7 percent for the greater part of the two decades spanning from 1990 to 2010, the 4.5 percent mortgage rates still look very attractive for today’s home buyers.
- Home prices are still very low. In 2006, home prices were at their peak. But today, you can buy a house for a price that is more than 30 percent off of what the same home probably cost just 5 or 6 years ago. When you consider this huge discount, a 4.5 percent mortgage rate simply doesn’t seem that bad for many home buyers.
- Since mortgage rates are on a bit of an upswing, some of the home buyers who have been considering buying a home may spring into action so they can get their mortgage rates locked in before they go higher.
There is some other good news in the housing industry, too. The number of homes sold in February increased by 9 percent when compared to the figures of homes sales in February of 2011. There were also signs of growth as the number of building permits for new single family homes increased last month to their highest rate in nearly two years. This figure is a good indicator of future construction so that’s definitely good news for the housing market and the economy in general.
Also, rates for a fixed 15-year mortgage are still below 4 percent. The average went from 3.16 percent to 3.3 percent which is just a small jump. The 15-year mortgage rates have quite a ways to go before they reach the 4 percent mark so there’s a good chance they will stay below 4 percent at least through the end of the year.