Experts: Say So Long To Mortgage Rates In The 3′s For Now
A 30-year home mortgage rate in the 3% range appears to have ended for now. The rates suddenly surged a full percentage point over the past month. “The market has been so stable for the past two years,” says Kim Neilson, executive vice president at McCue Mortgage in New Britain. “We haven’t experienced this type of jump in years.” The strengthening economy and federal monetary policy have helped bring up the rates as the housing market recovers. Borrowers consider the implications of higher rates.

One of the first areas to see the impact of the higher rates is borrowers with adjustable-rate mortgages and those looking to refinance their existing mortgage. “It’s always a concern when rates go up,” said Joanne Carroll, a spokeswoman for the Home Builders Association of Connecticut. “For every percentage point or part of a percentage point, you have the possibility of disqualifying people who are on the edge, like first-time home buyers.” Carroll said increasing rates could bring on more activity as buyers who have waited to purchaser now enter the market. Higher rates in the 4-5 percent range are still far below the once 6-7 percent that were considered reasonable in years past. Robert Bischoff, publisher of the Connecticut Bank Rate Recap in Clinton, said “But these rates shouldn’t deter house hunters they’re still fabulous, just not the bargain basement of the past two years.”
There are two main reasons for the rate increases experts say. Back in mid-June, the Federal Reserve Chairman Ben Bernanke said purchasing mortgage-backed bonds by the Fed might slow which has been a tactic help boost the housing market and keep the rates low. The improving economy also drives the mortgage rates up. The 10-year U.S. treasuries yield rose as well in an effort to entice investors looking for a larger investment return. The rise in the yield came after the jobs report indicated more jobs were created than expected and signs that people are more optimistic about being hired. The silver linings to rates increasing are that CD’s and savings account rates could rise as well which have been low. “If this is going to stick, we should see other rates go up as well,” Neilson said.

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Source: ©2013 The Hartford Courant (Hartford, Conn.)
Distributed by MCT Information Services
Posted by Breckenridge Associates Real Estate on


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