Interest Rates Increase Slightly Back Above 4%
With the spring buying season underway and a severe lack of qualify inventory there are plenty of buyers out there wanting to act. The fence sitters are off the fence as each time a new single family home hits the market that matches the needs of one of my clients off we try to go within hours to ensure we can act quickly. And each time we run in to other agents and their clients also scrambling to get an offer submitted in time. If the house is in good shape and well priced it is gone. Interest rates crept up last week after dipping below 4% once again the previous week. Interest rates while higher are still very attractive on a historical basis and if anything upward pressure will add to the buying frenzy.
As of this morning, the average overnight rate for a fixed 30-year mortgage as reported by Bankrate.com is at 4.01% up 4 basis points from where we stood one week ago today. The benchmark 15 year fixed rate is at 3.23% up 2 basis points from last weeks level while the benchmark 5/1 adjustable rate mortgage increased slightly to 2.87% from 2.86%.
While this move can hardly be described as significant the signals out of the Fed this week certainly were. The signal to investors is that they will not continue to buy more US bonds to provide further stimulus to the economy. Minutes from the last Federal Open Committee Meeting were released and it appears many members seem ready to let the US economy stand on it’s own two legs. Their massive purchases of our own bonds have certainly kept rates artificially low and these rates appear to be a big reason why real estate has been so strong. While I think rates could move a bit higher, and this will probably prod more buyers to act, anything north of 4.5% could be devastating to sales.
So another interesting juncture and again the time to lock in rates on a 30 year fixed mortgage under 4% may never be back again. But from a historical perspective money is still cheap, cheap, cheap. They have been fairly stable around the 4% for a long time and that stability may not hold true if the Fed actually does put a stop to their bond purchases.
Prices remain low, rates remain low and it is a great time to act but can you find that perfect home…………