June 5th, 2009
Weekly Mortgage Roundup June 5, 2009
Mortgage rates have skyrocketed recently, jumping nearly a full point from last month’s low to this month. In Freddie Mac’s recent survey of mortgage rates, the benchmark 30 year fixed rate averaged 5.29%; compare that to last week’s 4.91%. This is the highest average rate since December 2008. The 15 year fixed rate was 4.79%, up from 4.53% the previous week. Freddie Mac chief economist stated, “the 30-year fixed-rate mortgage rates caught up to the recent rise in long-term bond yields this week to reach a 25-week high.”
These higher rates may mark the end of the current refinancing boom. The current boom is being fueled by borrowers with high credit scores and low loan to value; as they are the few that are qualifying for loans. Obama’s Making Home Affordable plan is predicated on the fact that the homeowner is gainfully employed. As unemployment numbers stay high, more and more potential borrowers are being squeezed out by either high rates, or failure to qualify based on income for the federally backed programs.
The Fed needs to keep interest rates low in hopes of stimulating the housing market, but their rate cuts and other efforts to buy up bad debt are not having as much impact on the end mortgage rates as they were earlier in the year. The Fed will continue to try to keep rates low, but we may have seen the lowest of the low rates last month.
It seems that the rates are gonna be increased more in near future.