U.S. Mortgage rates rose once again this week, rates hitting 4.66%,, very close to the highest level of 4.71% peaked on 2011 May.
Freddie Mac’s released figures show that in the first 21 weeks of the current year, rates have risen in 15 weeks, making it the most sustained upward trend in the last 40 years, highest since 1972.
Depending on your economic perspective, this could be a return to a normal economy of the U.S. or an unwanted risk to an economy recovery.
Those increases translate into an additional 50.000$ of interest over the life of a 250.000$ loan, being a considerable loss for families who missed the low rates.It’s even worse as this is not just about mortgages, automobile financing and credit card debt will also be affected at the same time.
This sustained rise in mortgage rates, also have contributed to the drop of U.S. new home sales, with sales falling by 1.5 % in April, contrary with the March’s rise of 2%.
Freddie Mac weekly average rates for new mortgages as of 24th May :
- 30-year fixed rate loan rose from 4.61% to 4.66% last week to the highest level since 5th May 2011, while up from 3.95% a year ago.
- 15-year fixed rates jumped from 4.08% to 4.15% last week, while up from 3.19% from a year ago.
- 5-year fixed rates rose from 3.82% to 3.87% over the week, while up from last year’s 3.07%.
Mortgage Bankers’ Association Rates for the week ending 11th May :
- Average interest rates for 30-year fixed, backed by the FHA jumped from 4.78% to 4.90%, hitting the highest level since May-11.
- Average interest rate for 30-year fixed with conforming loan balances rose from 4.77% to $4.86%.
- Average 30-year rates for jumbo loan balances rise from 4.73% to 4.81%, reaching its highest level since Sep-13.
Those weekly figures released by the Mortgage bankers Association are showing that the Market Composite Index fell by 2.6% after a previously fall the other week of 2.7%.This fall is cause of the continous uptred in mortgage rates
The Refinance Index also dropped by 4%, down to its lowest level since Dec-2000, with the refinance share of mortgage activity falling further to 35.7% of total applications, the lowest level since 2008 and down from the previous week’s 35.9%, showing an sustained downward trend .
The competition for buying a home has been amplified by the increasing mortgage rates, with homes lasting an average of just 26 days on the market in April, down from 39 days back in April 2017.Buyers are looking to close sales before higher borrowing costs further reduce the affordability of homes.
On the other view, borrowing rates haven’t increased by that much, The average 30-year mortgage is still only 4.6%, below the 6.6% rate of summer 2006 or the 8.6% rate of May 2000.
Federal Reserved promised further interest rate hikes this year and the next, making it tough for borrowers and new home-buyers, making the economy looking more and more like the old economy.
On the other hand, there are some good news for home owners, as Trump announced further tax cuts.
