Back in January as mortgage rates ticked lower by the day, the outlook for housing began to look better. Lower rates obviously mean lower monthly payments, giving potential home buyers more of an incentive to actually pull the trigger on a purchase. Part of the reason the Fed is cutting rates is to get mortgage rates down in order to spur buying activity and more refis in the real estate market.
Unfortunately, since mid-January, even in the face of large rate cuts by the Fed, mortgage rates have spiked sharply. As shown in the chart below, the average 30-year fixed mortgage rate has risen from a low of 5.25% on January 23rd to its current rate of 5.82% as of yesterday (they've ticked even higher today).
Just a couple of weeks ago, we spoke with some real estate and mortgage agents and heard positive news on the market. Lower rates had in fact had an impact on buyers, and activity had started to pick up again. That mood has since changed as some buyers are backing off.
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The higher rates were inevitable. I still think 6% is a pretty good rate though.
Posted by: Mortgage Maniac | February 23, 2008 at 03:43 PM