Recently, mortgage rates have hit a two year high. Currently, rates are between 4.5% and 4.6%. The last time they were this high was on July 7, 2011. Although rising mortgage rates may seem like a worrisome topic, they are actually indicative of the housing market turning around. Understanding mortgage rates is simple economics, the higher the demand is for a product (i.e. homes) the higher the interest rates (i.e. mortgage rates) will be.
Although this increase does show that the housing market is getting better, it is also a top concern for prospective home buyers. The combination of rising interest rates and increasing home prices are making it harder for people to afford a new homes. However, the rising rates are a product of an increasing housing demand, so although this seems worrisome at first, it actually balances out in the end.
Many people are under the interpretation that the increase in mortgage rates will decrease the number of houses being purchased. However, the actual inventory of homes for sale places a greater weight on the home purchases. Although inventory has been rising in the last few months, there is still a higher demand than there is supply.
At this point, many experts are offering varying predictions of whether or not mortgage rates will continue to increase. After the New Home Sale Report was released by the US Census Bureau, mortgage rates dropped slightly. The New Home Sale Report reported a significantly fewer amount of closed home sales than expected which caused mortgage rates to temporarily decline. Overall, the fluctuation of mortgage rates is still within a reasonable and affordable home purchasing range. The current rates aren’t something to panic about, but they are something to keep your eye on. If you have any questions about financing your home purchase contact us today!