Mortgage Rates

Interest Rates on The Rise

Mortgage interest rates are on the rise.  In the past few weeks, interest rates have ticked upwards.   The raise in the interet rates hurt for sure: it reduces the amount of house many buyers can afford.  My buyers and have sellers have felt the sting.  Reality is that we had historically LOW interest interest rates and they couldn't last forever below 4%. So where are they going?  And how is the real estate market going to be impacted? Lawrence Yun, the chief economist of the National Associaton of Realtors, had the following points:

• Anticipates hitting 5% by mid year 2014 & may climb higher in 2015
• it will push some buyers out of the market (especially as sales prices are increasing)
• improvements in underwriting loans as they return to less restrictive requirements
• Yun estimates that 15-20% MORE households are qualifying for safe, affordable mortgages with conventional financing (Loans up to $417,000) with credit scores of 720 or above.  (In recent years the credit score needed to be 760-770)
• FHA Loans - credit scores of 660 (prevously was 680-700)
• Freddie Mac & Fannie Mae have greatly improved their performance & are starting to turn profits.  Hopefully once they have repaid tax payer funds they will reduce some of these fees

It's important to remember as mortgage interest rates rise, they are still low and it is a great time to buy a home.