50 Year lows on interest rates have begun to rise and most predict that's just the way it's going to be. According to Freddie Mac's weekly mortgage market survey, average 30-year fixed rates are up to 4.86% from 4.17%. Bankrate.com has the average at 5.02%, crossing the 5% mark for the second time in 3 weeks.
Rates haven't been this high since May and most industry experts expect them to remain in the 5%-6% range for the rest of the year. This can be good news for any clients that have been walking the line the last few weeks and could put them over the hump and create some urgency in the market.
The initial phase of an interest rate increase generally does not hurt markets," said Lawrence Yun, chief economist for the National Association of Realtors. "In fact, it can help."
"If we add 2 million jobs as expected in 2011, and mortgage rates rise only moderately, we should see existing-home sales rise to a higher, sustainable volume," said Yun.
"If the other factors are aligned," he said, "interest rates are not a big thing."
The real mortgage challenge, according to Yun, is to increase the number of loan applicants winning approvals. Too many potential homebuyers are still finding it difficult to qualify for loans. "The current mortgage market is a unique situation" he said. "It's less about rates than it is about underwriting standards, which are, in my opinion, still too stringent." "If lenders return to more normal, safe underwriting standards for creditworthy buyers, there would be a bigger boost to the housing market and spillover benefits for the broader economy."
What do you think the rising rates will do to your market?
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