If you are waiting to buy because you think mortgage rates just might drop a little lower, think again. Quite honestly, they were low for so long, it is a wonder they didn’t rise already. The market has become so accustomed to unfavorable economic news pushing the rates down that many people have just taken for granted that they will stay down in that desirable position. Unfortunately, that’s not the way it works.
According to a Bankrate.com survey of larger lenders, their 30-year fixed rate mortgages actually rose to 3.91 percent from 3.86 percent. Although a year ago, it was at 4.41 percent, this is the first time in quite a while that it has been able to leap free of that 3.75 percent mark. Even the 15-year fixed-rate mortgages reported in at 3.12 percent on 22 August 2012 from 3.05 percent the week before.
Freddie Says Otherwise
Although these statistics are impressive, they are merely based on a lender survey. The name you really want to listen to is mortgage giant Freddy mac. According to this lender, they reported rates at 4.08 percent and suggest that 4.25 percent will be seen by the end of the year.
The Influence of External Events
Some people do not pay much attention to global events because they feel they don’t directly affect them. If this sounds like you, then you should know that you may not think it affects you, but it does.
U.S. mortgage rates have been affected for the past few months by the euro zone crisis. As this situation is proving to become more stable every day, investor confidence has been created. This has resulted in less demand in what some deem safe U.S treasures.
External events drive interest rates. One small hiccup of negative economic news in the U.S. or talk of disappointing earnings in Europe and you will quickly see mortgage rates and treasury yields go right back down. While this may sound favorable to you, when this happens, it means that the nation as a whole is not thriving.
How Far Will They Rise?
Although rates are on the rise, there is little chance that they will spike; at least not this year. The Federal Reserve always talks about being so dedicated to keeping rates down that they wouldn’t dare let them skyrocket during an election year. They will rise to give potential homebuyers confidence that the market is taking a positive turn, but they won’t rise so far that they will deter people from purchasing. In fact, the Mortgage Bankers Association has suggested that there will be another half-percent increase for the fourth quarter.
Bad News to Come
While people are wrapped up in watching mortgage rates, they may not know that there are new regulations in the making that will increase lender fees. Plus, the government has been passing legislation that will require increased costs to be placed on “affordable” FHA loans and conventional loans. Of course, they are being very quiet about this. If you are considering buying a home or refinancing, now is the time. You will likely be disappointed if you wait much longer.