Interest Rates Flat After Last Week’s Big Jump
Interest rates stabilized this week after last week’s big jump which brought us above 4% to the highest levels we had seen in over 4 months. There was virtually no change this week with little movement in rates and we will have to wait to see which way the trend goes from here. Will downward pressure pull them back down below this historic level or will higher rates that could have a major effect on the South Florida real estate market be heading our way?
As of this morning, the average overnight rate for a fixed 30-year mortgage as reported by Bankrate.com is at 4.03% unchanged from where we stood one week ago today. The benchmark 15 year fixed rate is at 3.24% down 2 basis points from last weeks level while the benchmark 5/1 adjustable rate mortgage increased slightly to 2.89% from 2.88%. Interest rates, along with the GDP and the unemployment rate are the most important factors affecting the real estate market throughout the country and while some think a spike in rates may help spur some buyers there are concerns.
Not only is an increase in rates facing buyers but so are new changes to upfront mortgage insurance fees on FHA mortgages which are going down for those who are refinancing but jumping 70% for those who are purchasing a new home. As of June 11th, that fee will jump from 1% to 1.7% so if a buyer is borrowing $300,000 from the FHA their closing costs will jump an additional $2,100. But the FHA is kind so buyers can, if they choose lump the upfront mortgage premium into their loan and pay that off over 30 years as well.
So this week watch closely to the economic news and where rates from here. If we continue to see improvement in GDP, unemployment and other factors rates should jump higher and while a slight jump may in fact spur buyers there are few homes for them to purchase. Potential price increases are on the way, if not already here, and add that in with higher rates and we could a damper slapped on the recent improvements. While everyone acknowledges that housing usually leads us out of difficult economic times this time it may be different indeed.
Once again hoping rates under 4% return this week but not confident. They may in fact be gone for good............
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