ONE STEP BACKWARD - Mortgage Rates Rise for the First Time in 90 Days!
MORTGAGE INTEREST RATES CATCH UP TO INCREASE IN LONG-TERM BOND YIELDS!
In the past week, Average Mortgage Interest Rates seemed to jump higher than the price of a gallon of Unleaded Regular on the North Side of Chicago!
As reported in an Associated Press story in yesterday's Chicago Tribune, according to giant U.S. Mortgage Investor and Guarantor, and now a part of the Federal Government, Freddie Mac, the average rate on 30-Year Fixed Rate Mortgages rose to 5.29% last week, up from a 4.91% average one week earlier. This represented the highest average weekly rate in roughly six months!
The jump in rates, according to Frank Nothaft, Freddie Mac Vice President and Chief Economist, followed a significant increase in the yield of the 10-Year T-Bill benchmark. This rate generally foretells applicable rates on mortgage loans and other consumer notes. Last month, the 10-Year Treasury Bill advanced to 3.75% - a six-month high!
Many experts were beginning to see signs the U.S. Housing Market was starting to stabilize. Here in Chicago, our Real Estate Team has noticed a surge in showings, and subsequent interest, in many in-city and suburban properties we market, especially for properties in the lower, more-affordable price ranges, many appealing to first-time homebuyers with no current property to sell, and an $8,000 U.S. Government First Time Homebuyer Credit to take advantage of.
However, some fear that escalating mortgage interest rates can quickly derail any rebound. According to the Mortgage Bankers Association, Mortgage Applications fell 35% over the past week. Re-finance applications, which, until recently, made up 75% of total mortgage applications, tumbled last week to 60% of total mortgage loan volume.
Quoted rates do not include additional loan fees, known as "points." Across the U.S., such fees averaged 0.7% of the principal amount for a 30 or 15-year amortized loan.
Remember, as well, that the best advertised rates apply to only the most qualified borrowers, as loan standards have tightened considerably over the past 12 months. For the others - the majority of borrowers - the rates they receive are between 0.25 to 0.50% higher than the most attractive rates advertised.
DEAN MOSS & DEAN'S TEAM CHICAGO
