Mixed news on inflation drove the 30-year, fixed-rate mortgage to its highest rate in almost four years. Short-term adjustable-rate loans got a bit of relief.
The benchmark 30-year fixed-rate mortgage rose 6 basis points to 6.73 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week's survey had an average total of 0.34 discount and origination points. One year ago, the mortgage index was 5.78 percent; four weeks ago, it was 6.57 percent.
The 15-year fixed-rate mortgage rose 3 basis points to 6.33 percent. The 5/1 adjustable-rate mortgage fell 2 basis points to 6.33 percent.
The last time the 30-year fixed-rate mortgage had a higher rate was June 12, 2002, when it was 6.74 percent. The week after that, it fell to 6.6 percent and remained below that mark for 200 weeks. It looks like those days are gone.
The long term trend has been up. Although, there are some in the housing industrial complex who are dismissive.
"That sounds kind of bad, but Michael Carliner, chief economist for the National Association of Home Builders, isn't freaking out yet."I wouldn't base it on one month," says Carliner, who is a strong advocate for the position that a single event doesn't make a trend. "If we continue to see prices rise, I think this is outside the Fed's comfort zone. If this is not a single-month spike -- a fluke -- then I think they're going to keep raising rates, and that also the long-term market is going to be influenced by it as well."
Higher interest rates; less purchasing power for buyers; lower prices.
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Or, higher interest rates = less purchasing power for buyers = sellers not caring and continuing to price as if their's is the special one. I truly believe it will take mad price slashing by the HB's to try and unload the huge glut of new homes to make sellers of existing homes drop their prices significantly. But that will make it all the more fun when everyone finally "gets" that the boom is over.
ReplyDeleteSellers will eventually get their prices right. If they sit too long or have a realtor consistently telling them they're mispriced they'll have no choice but to change.
ReplyDeleteMy $0.02.
Eventually like in 2008? :) It's all about public perception of the market--in places where the data have been well-publicized, asking prices are (anecdotally) dropping a bit, while others that have little to no coverage are seeing more resistance. I'm not saying the media has created the HB,as bulls love to spew, but if sellers are not pounded over the head about a slowing market in their area, they have no incentives to reduce prices. You can bet your last $ that on the way up, everyone and their brother could tell you the amount their home appreciated in the past 6 months just by reading the paper. Not so much any more...kind of like gas prices. Wow they went up quick with all the talk about the jumps in crude, but now that inventories are up and demand is level to lower YoY, crude is about 6% lower and gas is below $2 at the wholesale level, it will take a loooong while for them to drop. Up like a rocket, down like a feather, or until somebody pulls you down.
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