Impact of mortgage rates on housing payments

The average 30 yr mortgage rate jumped to 4.51% for the seven-day period ending on July 10th.  That is an increase from 4.29% a week earlier and 3.98% for the second week in June.  The higher rates increased monthly principle and interest payments by roughly 6.5%.  OMG the rates for 10 yr loans are the same as what 30 year loans used to be just a short time ago.


Rates have climbed over a full point in recent weeks mostly on speculation about when the Federal Reserve will end its purchases Treasuries.  The 10 year treasury bond determines mortgage rates. 

Applications for purchase mortgages fell 3.1% last week from the last week in June, the second consecutive decline.  However, the impact on the refinance side was much stronger.

An increase in mortgage rates will impact affordability and cause some shoppers to think twice about buying. However,  rates are still low by historical standards.  Rates were well above 4.5% until mid-2011. I remember a loan in 2000 that was 8%.   The good part about climbing rates is that the decline in refinance activity will push lenders to search out more potential borrowers and ease credit standards, allowing access to credit for many borrowers who have been shut out in recent years and unable to take advantage of low rates.

Mortgage Interest rates heading higher

Rates are slowly drifting upward. They have risen ½ % point since the lows of last fall. People have gotten too used to low rates and don’t get that this is historic and not normal. The federal reserve has been artificially keep in g interest rates low by buying up 10 year bonds. This is the rate that determines mortgage interest rates., Just the announcement that they are planning –just planning- to end this has started the upward spiral. They have not said if they will stop buying all at once or gradually.

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