Mortgage rates spiked again this week and reached their highest levels in two years, ruining refinancing plans for many homeowners while anxious homebuyers try to beat the clock.
The benchmark 30-year fixed-rate mortgage rose to 4.66 percent, compared with 4.48 percent last week, according to the Bankrate.com national survey of large lenders. The mortgages in this week’s survey had an average total of 0.28 discount and origination points. One year ago, that rate stood at 3.79 percent. Four weeks ago, it was 4.14 percent.
The benchmark rate on the 30-year fixed has risen more than a full percentage point since May 1 when the rate stood at 3.52 percent. The last time the 30-year fixed was this high was July 27, 2011, when the rate was 4.74 percent.
The benchmark 15-year fixed-rate mortgage rose to 3.75 percent this week, compared with 3.62 percent last week. The 15-year fixed is at its highest level since July 2011. The benchmark 5/1 adjustable-rate mortgage rose to 3.63 percent from 3.48 percent, and is at its highest level since April 2011. The benchmark 30-year fixed-rate jumbo mortgage rose to 4.82 percent from 4.66 percent. The last time the jumbo was higher was March 21, 2012.
Forget rates in the 3s
It’s unlikely rates will fall much unless the U.S. economy slows down significantly or the Fed announces that it will continue to spend $85 billion per month in bond purchases, says Derek Egeberg, a branch manager at Academy Mortgage in Yuma, Ariz.
As Fed Chairman Ben Bernanke has said, the Fed might reduce the size of the bond purchases this year. But minutes of the latest Federal Reserve policy meeting, released Wednesday, show members of the Federal Open Market Committee have mixed opinions about when to end the program.
„All participants but one judged that it would be appropriate to continue purchasing both agency (mortgage-backed securities) and longer-term Treasury securities,“ according to the minutes. „About half of these participants indicated that it likely would be appropriate to end asset purchases late this year. Many other participants anticipated that it likely would be appropriate to continue purchases into 2014.“
By Polyana da Costa • Bankrate.com
Read more here http://www.bankrate.com/finance/mortgages/mortgage-analysis.aspx
Many analysts are worried that rising mortgage rates will throw cold water on prospects for the improving housing market, but mortgage interest is only one of the factors in the decision to buy.
The increase in home prices has improved home equity for many who were underwater in their mortgages, providing them with incentive to sell their current homes to buy others. In much of the country, home prices are still off the peaks attained during the housing bubble, and rates, though higher, are still attractive
Another big factor in the decision to buy a home is consumer confidence in the employment and economic outlook