Mortgage Rates on the Rise

We've been talking about it for weeks. Now mortgage rates are starting to go up slowly. How high have they gone in the last couple weeks?

We’ve been sitting comfortably for several weeks with the lower mortgage rates that averaged below five percent. But those rates are beginning to rise as an increase for the second straight week has indicated.

The decreasing demand for homes is one of the reasons that the average rate for a 30 year mortgage loan with a fixed rate increased from 4.96 percent last week to 4.99 percent this week. According to Freddie Mac, a mortgage lending giant, the average rate for a 15-year fixed-rate mortgage this week went up by about .01 percent over last week’s ending average. As for five-year adjustable-rate mortgages, the average went up by about 0.05 percent this week to 4.14 percent. Finally, the rates for a one-year adjustable-rate mortgage went up by about 0.08 percent to 4.20 percent in the past week.

These mortgage rates do not include additional fees that home buyers can expect to pay when they get a new mortgage. These extra fees are typically referred to as “points” and one “point” is equal to one percent of the amount borrowed by the homeowner. For instance, if a home costs $200,000 with one point, the borrower would be paying $202,000 in addition to the fees and other charges.

Analysts are closely watching how the mortgage rates fluctuate while the Federal Reserve plans to end its program which was designed to support the housing industry with about $1.25 trillion in financial backing. If the rates continue to rise, home prices will go back up and the demand for homes will drop once again. That program ends this week and rates have continued to climb lately as a result.

According to Scott Brown, the chief economist at Raymond James and Associates, the Federal Reserve could step back into the situation with more money for bond. He says the Feds are reserving the right to do that if the mortgage rates start to get out of control. In February of this year, the number of new home sales dropped to an all-time low due to a variety of factors, including unemployment, foreclosures, blizzards and the downturned economy. Also, the number of existing home sales also fell for a third consecutive month. In the week that ended on March 19, however, the number of home applications increased by nearly three percent while the number of mortgage applications dropped by about four percent with a drop in homebuyers wanting to refinance as well.

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Featured - 30 Year Fixed Mortgage Rates 2019

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