WASHINGTON – Average U.S. mortgage rates rose modestly this week, a move that makes home-buying a bit less affordable. Still, rates remain near historically low levels.

Mortgage buyer Freddie Mac said Wednesday that the average rate on the 30-year loan increased to 4.29 percent from 4.22 percent last week. The average on the 15-year fixed ticked up to 3.3 percent from 3.27 percent.

Rates have risen nearly a full percentage point since May after the Federal Reserve signaled it might slow its bond purchases by the end of the year. Rates peaked at nearly 4.6 percent in August. But the Fed held off in September and most analysts expect it won’t move until next year.

The increase in mortgage rates has contributed to a slowdown in home sales over the past two months.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country at the beginning of each week. The average doesn’t include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1 percent of the loan amount.

The average fee for a 30-year mortgage was unchanged at 0.7 point. The fee for a 15-year loan also was unchanged at 0.7 point.

The average rate on a one-year adjustable-rate mortgage edged down to 2.60 percent, from 2.61 percent last week. The fee was unchanged at 0.4 point.

The average rate on a five-year adjustable mortgage edged down to 2.94 percent this week, from 2.95 percent last week. The fee was unchanged at 0.5 point.

Source: http://www.buffalonews.com/business/average-mortgage-rates-rise-modestly-20131127


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As mortgage rates have risen recently, many people appear to have started to panic. Mortgage rates really haven’t spiked, but they have increased, experts say. The increase appears to be a shock to some, but analysts point out the rates had been dropped to all-time lows.

All good things must end, and that is the case with the mortgage rates. Experts point out that two months ago, a 30-year fixed rate mortgage had an interest rate of only 3.35 percent. Instead of working about them increasing to slightly over four-percent, people need to realize why they were so low.

The rates were reduced because the Federal Reserve had no confidence in the economy. Rising mortgage rates has a positive overall meaning, the economy is improving. An improving economy has a major overall impact on a variety of industries and markets.

What should be expected? Experts say as the economy improves, mortgage rates will slowly increase and make it back to their normal levels.

While some reports have indicated that rising interest rates could negatively impact the housing market, others indicate that is not the case. According to the Mortgage Bankers Association, the volume of applications to refinance mortgages since May has dropped by 53 percent. The volume of applications for purchase-money mortgages, which are mortgages for those wanting to buy homes, has decreased by only eight percent.

To sum it up, fewer people need to refinance and the number of those wanting to buy since May has been barely affected. The number buying new and existing homes has not been drastically affected by the rising rates. The most recent national average has the thirty-year fixed rate mortgage at 4.51 percent. The Wall Street Journal has pointed out that even when that rate reaches five percent the cost of housing is still affordable by historical standards.

So as the economy improves, the mortgage rates will continue to rise. Overall, that could be a positive thing because it means that many industries are seeing growth. When industries see growth, there is an increase in cash flow. If people have the cash flow, they can and will buy houses. Increasing mortgage rates are not to believe to result in a major negative impact on the housing market, according to analysts.

However, if someone wants to take advantage of the historically low mortgage rates, now is the time to act, experts indicate. As the economy improves, the rates will continue to climb.

Source: US Finance Post

NEW YORK (TheStreet) -- Mortgage interest rates fell back last week after 30 days of upward momentum.




The question homebuyers and real estate agents are asking is: Where will mortgage rates go now?




For the week, 30-year fixed mortgage rates fell from 4.55% to 4.44%, according to the BankingMyway.com Weekly Mortgage Rate tracker.




Fifteen-year fixed-rate mortgages also fell, from 3.77% to 3.61%, while five-year adjustable rate mortgages slid from 3.38% to 3.23%.




Economists say rates have fallen over hints from the Federal Reserve that it might ease up on its mortgage bond purchase program, which has helped keep mortgage rates low.




Fannie Mae (FNMA_) offers some guidance on the issue with its June National Housing Survey.




In it, Fannie Mae surveyed 1,000 Americans on their views on homeownership, home prices and mortgage rates. In the survey, 57% respondents expect mortgage rates to rise over the next 12 months -- that's up from 46% in the May survey, and it's the highest number in the three-year history of the survey.




In addition, 57% of survey respondents expect home prices to rise, with 72% of Americans saying it's a good time to buy a home.




In a way, FNMA says, potential homebuyers are in a race to buy a home before mortgage rates and home prices rise too high.




"The spike in mortgage rate expectations this month seems to have had an impact on a number of the survey's indicators and may increase housing activity in the near term by driving urgency to buy," said Doug Duncan, senior vice president and chief economist at Fannie Mae. "Consumers may recognize that today's still-favorable mortgage rates and homeownership affordability levels will recede over time. Given rising home and rental price expectations and improving personal financial attitudes, more prospective homebuyers may be deciding that now is the time to get off the fence."




Fannie Mae provides some additional consumer sentiments related to the housing sector, and the economy in general:




    46% of Americans say their personal financial situation will improve over the next year -- the highest level since 2010.

    26% of Americans report their household income is up -- a 6% rise from last year.

    47% of respondents say it would "easy" for them to get a mortgage this year.




Clearly, the FNMA survey indicates Americans are more bullish on the economy, and on their own personal financial situation. That said, many respondents seem to think the economy is in a "sweet spot" right now, with home prices and mortgage rates at reasonable levels.




Americans expect home prices and mortgage rates to trend higher, as the housing market moves out of that sweet spot, and into more expensive territory.




Source:  The street

WASHINGTON (AP) — The average U.S. rate on the 30-year fixed mortgage rose this week to 4.51%, a two-year high. Rates have been rising on expectations that the Federal Reserve will slow its bond purchases this year.

Mortgage buyer Freddie Mac said Thursday that the average on the 30-year loan jumped from 4.29% the previous week. Just two months ago, it was 3.35% — barely above the record low of 3.31%.

HOUSING: Mortgage applications continue to fall

The average on the 15-year fixed mortgage rose to 3.53% from 3.39% last week. That's the highest since August 2011.

Chairman Ben Bernanke has said the Fed could slow its bond purchases this year if the economy strengthens. The purchases have kept rates low. The yield on the 10-year Treasury, which mortgage rates typically track, has been rising.

Even with the gains, mortgage rates remain low by historical standards. Low rates have helped fuel a housing recovery that is helping to drive economic growth this year.

The annual sales pace of previously occupied homes topped 5 million in May for the first time in 3.5 years. And sales of new homes rose at the fastest pace in five years.

Greater demand, along with a tight supply of homes for sale, has pushed up home prices. It also has led to more home construction, which has created more jobs.

To calculate average mortgage rates, Freddie Mac surveys lenders across the country on Monday through Wednesday each week. The average doesn't include extra fees, known as points, which most borrowers must pay to get the lowest rates. One point equals 1% of the loan amount.

The average fee for a 30-year mortgage was 0.8 point this week, up from 0.7 point last week. The fee for a 15-year loan also rose to 0.8 point from 0.7 point.

The average rate on a one-year adjustable-rate mortgage was unchanged at 2.66%. The fee rose to 0.5 point from 0.4.

The average rate on a five-year adjustable mortgage rose to 3.26% from 3.10%. The fee was unchanged at 0.7 point.

Source: USA Today

Trulia TRLA +0.3%ulia’s Chief Economist reveals that rising mortgage rates are the top worry for people thinking of buying a home someday, and 56% of Americans say they would be discouraged from homeownership if rates reach 6%. But consumer surveys aside, pay more attention to what consumers do than what they say.

After years of low-and-lower mortgage rates, the 30-year fixed rate shot up from a near-historic-low of 3.35% in early May to 4.46% in late June before settling back to 4.29% last week, according to Freddie Mac . The rate increase was sudden and steep, but not a surprise. Economists and forecasters have been waiting for rates to go up for two reasons: (1) the strengthening economy tends to push up rates, and (2) the Fed is expected to pull back on bond-buying and other measures that have kept rates low, which they reaffirmed in mid-June. By historical standards, rates are still low: remember that mortgage rates hovered around 6% for most of the 2000s, 7-9% in the 1990s, and above 10% in the 1980s. Nonetheless, the recent rate climb has been steep. 

What Consumers Think of Rising Rates
Consumers are anxious about rising mortgage rates. Trulia surveyed more than 2,000 people during June 24-26, after rates rose sharply. We asked what their biggest worry would be if they were to buy a home this year. Among all consumers who plan to buy a home in the future, 41% said their top worry is that mortgage rates would rise before they actually bought. The next biggest worries were that prices would rise before they actually bought (37%) and that they wouldn’t find a home for sale that they like (36%).

How high do mortgage rates have to rise before consumers are discouraged from buying a home? Among consumers who plan to buy a home someday, 13% said that mortgage rates of 4% (which is what the rate had climbed to when the survey was conducted) were already too high for them to consider buying a home. Another 20% said they’d be discouraged from buying a home if rates reach 5%; yet another 22% said they’d be discouraged from buying a home if rates reach 6%. Combining these groups, 56% of consumers who plan to buy a home someday would be discouraged from doing so if rates reach 6%. Among renters who plan to buy a home someday, 62% would be discouraged from doing so if rates reach 6%.

Watch What They Do, Not What They Say
Consumers are right to worry about the effect of mortgage rates on housing costs. Higher rates, of course, raise the monthly mortgage payment for a loan. For instance, at 3.35% the monthly payment on a $200,000, 30-year fixed-rate loan is $881; at 4.46% the payment jumps to $1009 – that’s a 14% jump in the monthly mortgage payment between early May and late June. This means a consumer can afford less house for a fixed monthly payment, which – all else equal – should reduce housing demand and home prices in the long term. In the short term, however, if consumers expect rates to rise further, some might rush to buy, which could boost sales and home prices temporarily.

However, in the recent run-up in rates, not much has happened to either prices or to home-purchase mortgage applications. Trulia’s Price Monitor, which is the earliest indicator of price trends available, shows that asking prices in June rose 1.5% month-over-month – showing no signs of a slowdown while not spiking much above price gains in the previous few months. Nor is there any sign of either a slowdown or a spike in mortgage applications by prospective homebuyers, either: the Mortgage Bankers’ Association (MBA) index for home-purchase mortgage applications in June rose 2% month-over-month and 11% year-over-year (comparing 4-week moving averages).

So far, the biggest impact of higher mortgage rates has not been on home purchases, but on refinancing. The MBA’s refinance mortgage applications index in June fell 24% month-over-month and 40% year-over-year. Unlike buying a home, refinancing is a purely financial decision that people can do relatively quickly, so the impact of rising rates on refinancing is sharp and almost immediate. Both low mortgage rates and expanded eligibility rules for government-sponsored programs have encouraged refinancing over the past couple of years, which lowered borrowers’ monthly payments so they had more money left over to spend or save. With rising rates, though, few people who haven’t refinanced already will do so now.

What Effect Will Rising Rates Have?
Rising mortgage rates are making consumers nervous and discouraged. Higher rates make housing less affordable and should help slow home price gains from a rapid boil to a gentler simmer. But so far, the effect of rising rates on the housing market – aside from the drop in refinancing – has been limited and is unlikely to derail the housing recovery. Why? Four reasons:

    Mortgage rates are rising alongside a strengthening economy, boosting housing demand. By themselves, rising rates make housing more expensive and hurt housing demand. But rates aren’t rising in a vacuum. After a severe recession, economic recovery tends to push interest rates higher as demand for credit increases and investors worry more about inflation. Furthermore, the Fed has tied its plans to taper bond-buying to signal that the economy is getting stronger. Therefore, by design, the strengthening economy should boost housing demand at the same time that rising rates dampen housing demand.
    Inventory remains tight, making it hard for homebuyers to rush their purchase. Even though the number of homes for sale has recently started to increase, inventory remains tight. That means buyers who want to find and buy a home quickly to beat rising rates might be held back by slim pickings. In fact, among survey respondents who actually plan to buy a home within the next year, not being able to find a home they like edges out rising mortgage rates as their #1 worry.
    Rising rates could lead to expanded mortgage credit. Mortgage rates matter – but only if you can get a mortgage in the first place. Although credit might be starting to open up for the most qualified buyers, credit remains tight. But rising rates could have a silver lining: as refinancing demand dries up, banks might look to expand their home-purchase lending instead. When rates were at their low point last fall, refinancing accounted for more than 80% of mortgage applications, so the recent drop in refinancing leaves a big hole in banks’ mortgage business that home-purchase loans could fill. Even though consumers are anxious about rising rates, we bet they’d rather have a 5% loan that they can actually get than a 3.5% loan they can’t get.
    Buying is still a lot cheaper than renting. There’s no question that rising rates make home-buying more expensive than it was a few months ago. But we can’t turn back time: the choice is not to buy now or six months ago. Rather, the choice that many consumers face is whether to buy or rent today at current prices, rents, and mortgage rates. Right now, that math still makes buying look like the better deal – by far. Even with a 4.5% 30-year-fixed mortgage, buying is 37% cheaper than renting nationally; that’s because a 4.5% rate is still very low by historical standards, and prices are still modest relative to rents. Nationally, renting doesn’t get cheaper than buying until rates reach 10.5%, though the tipping point is below 6% in the Bay Area and Honolulu.

Overall, rising mortgage rates will help slow down recent home price gains and should help the market avoid veering into bubble territory. Rising rates will put homeownership out of reach for some consumers, but the strengthening economy and the possibility of easier mortgage credit could keep some discouraged homebuyers in the game.

NEW YORK (Reuters) - An unrelenting surge in interest rates for U.S. home mortgages pushed borrowing costs to their highest level in two years last week, stymieing demand from potential homeowners, data from an industry group showed on Wednesday.

Interest rates on fixed 30-year mortgages rose for the ninth week in a row to average 4.68 percent in the week ended July 5, the Mortgage Bankers Association said. It was the highest level since July 2011 and a 10 basis point increase over the week before.

The surge in costs has been expected to push some undecided buyers into the market as they rush to lock in rates before they rise even more, but MBA's seasonally adjusted gauge of loan requests for home purchases fell 3.1 percent, the second straight week of declines.

Rates have been rising since early May, and the increase accelerated after comments from Federal Reserve Chairman Ben Bernanke last month that the U.S. central bank expects to wind down the pace of its quantitative easing program later this year if the economy improves as expected.

The Fed has been buying $85 billion a month in bonds and mortgage-backed assets to keep borrowing costs low and stimulate economic growth. The historically low mortgage rates have helped lure in buyers as the housing market gets back on its feet.

The recent higher cost of mortgages has raised concerns that the increase could dampen demand and slow the housing recovery, though most economists do not expect the recovery to be derailed. Even with the increase, rates remain historically low.

Demand for refinancing has been hit harder as refinancing becomes less attractive at higher rates. MBA's measure of refinancing applications fell 4.4 percent last week and the refinance share of total mortgage activity slipped to 64 percent of applications.

The index of mortgage application activity, which includes both refinancing and home purchase demand, fell 4.0 percent.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

(Reporting by Leah Schnurr)

Mortgage rates recovered roughly one third of the ground lost on Friday, though this varies from lender to lender.  For the sake of perspective, today's improvement was one of the 3 biggest moves of the year, but even if it was factored in last week, Friday simply be one of the 5 worst days for rates in the past 10 years instead of the worst.  30yr Fixed  best-execution eased back to a range of 4.625 - 4.75--roughly a quarter of a point higher than last Tuesday and Wednesday.




It's important to note that financial markets were not exactly back in the swing of things in terms of summer-time participation.  It's easy to assume that markets are the sort of thing that are either "on" or "off," but people actually make a difference.  During this time of year (and especially when there are holiday market closures or days with limited data), some of those people do what other people do and take time off.  This has an effect on how markets function-- increasing volatility or distorting reality.  These side effects are far from guaranteed, but market participants aren't yet sure what to make of today's bounce back in interest rates because markets simply weren't active enough to draw any conclusions. 

It could be the case that we recover even more ground before Wednesday's main event: the Minutes from June's FOMC Meeting.  It could also be the case that we're merely catching our breath before more wild rides higher.  The point is that we can't know yet.  Every time we experience a jarring move higher in rates, there's hope that it will be the last one for a while, but it continues to be the case that we have yet to see a definitive turn  since early May.  That said, if you'd told traders in the secondary mortgage market that we would embark on a massive sell-off the day before it began, and asked them where 30yr rates would likely find their best supportive ceilings, the two most common answers would likely have been 4.375% and 4.875%. 

There is hope for some consolidation in this rate range, but it pays to keep the potential volatility in mind.  Not even three months ago, you could think of changes in rates happening not to rates themselves, but simply to the costs associated with those rates.  The day to day risks were minimal compared to today where the actual rate itself may be moving an eighth to a quarter of a percent at a time.  The scope of possible movement higher or lower has widened.

Loan Originator Perspectives

"Today we were able to recover almost half of the losses in MBS from Friday's runaway selloff. But you couldn't tell from today's rate sheets. Mortgage rates will be slow to improve until some sense of stability is back in the market. I continue to advise all of my clients to lock their rate in to secure their terms. " -Kenneth Crute Branch Manager Prime Mortgage Lending Inc

"Took a new application today, and we'd lost over .25% in rate from last Wednesday, even with a moderate MBS improvement this AM. Today's gains are less than 1/2 of the ground we lost during Friday's historic selloff, but something is better than nothing. Hopefully we'd seen the worst of this debacle, but I wouldn't bet the farm on it." -Ted Rood, Senior Originator, Wintrust Mortgage

"For my customers that are out shopping for new homes, the only thing you can do is keep them posted of the volatility in the market, and let them know that rates could change at any time. Today has been a good day for rates, but as we've seen, we could see another sell off tomorrow! So if you have a customer that is out shopping at their max approval amount, I would be very careful with what they are looking at, and let them know they may qualify for that house on Monday, but not qualify on Tuesday! Communication will now be more important than ever." -Jason York, VP of VA Operations, Prime Mortgage Lending, Inc

"Locking last week before the Friday jobs report was a good call. I'm still locking as there appears to be no end to the rise in rates." -Mike Owens, Partner, Horizon Financial Inc.

Today's Best-Execution Rates

    30YR FIXED - 4.75-4.875%
    FHA/VA - 4.25%  -4.75% (depending on lender buy-down structure)
    15 YEAR FIXED -  3.875%
    5 YEAR ARMS -  3.0-3.5% depending on the lender


source: Matthew Graham at mortgage daily news

      Since April, mortgage rates have jumped almost 1 percent, causing concern for those in the market to buy a home.

"We've seen people that were shopping two months ago, that they're qualified for less house now," said Marc Elliott with Core Lending.

Elliott says if you qualified for a loan back in March or April, and are still looking for a house to buy, you're going to have to make some changes.

"Maybe they're going to look for a little cheaper home. Maybe they're going to look to adjust their budgets," Elliott said.

So why the rate increase?

"The Federal Reserve was buying mortgage back securities to keep rates low. And as the economy is starting to recover, they've decided to not do that anymore," Elliott said.

Elliott tells us rates that were around 3.5 percent last month have jumped to nearly 4.5 and will continue to rise.

"Down the road, we're going to see more increases. That it's going to hit 5 and then possibly beyond, to get back to where rates were several years ago," Elliott said.

"Last week was the single biggest increase in a rate, in a one-week period in the last 10 years, so that's going to have a dramatic effect," Houston Association of Realtors Chair Danny Frank said.

Frank says he believes the rate increase might actually boost home sales.

"I think it's going to push the people to make a decision to buy a home right now. That's why I think it will make the market even stronger than it is today," Frank said. "Now's a great time to buy a house. It's even a better time to sell a house."

However, not so good news if you're looking to refinance.

"We found that people that were able to refinance, or made sense to refinance a month ago, now it really just doesn't anymore," Elliott said.

Right now the 30-year conventional rates are at 4.5 percent right now. Fifteen years are at 3.75 and FHA 30-year rates are 4 percent.               

source ABC local