Rising Mortgage Rates Will Cool the Housing Market
The past three months, 30 year fixed conforming mortgage rates have risen over 1.00 percent from around 3.50 percent to 4.50 percent. Historically speaking, mortgage rates are still low but if rates keep rising along with home prices the housing market will cool down.
Home prices have risen dramatically over the past two years in many markets across the United States. The low double-digit increase in prices took analysts by surprise. In several different housing markets, home prices have risen around 13 percent year over year. That is considerably higher than the 3 percent range most housing analysts expected.
The increases in both current mortgage rates and home prices have made homes less affordable. In some markets the increase in both rates and home prices has already priced first-time homebuyers out of the market. Another factor making home buying harder for a first-time buyer is stricter lending standards.
After the go-go days when anyone with a pulse could get a mortgage without even providing documentation of income, lenders are requiring much more information and 20 percent down payments for jumbo loans. The double-digit increase in home prices isn't sustainable in the long run because household income isn't rising as quickly. A more normal increase in home prices of 1 percent to 2 percent over the rate of inflation will mean a healthy housing market in the long run.
Mortgage rates today on 30 year conforming loans are averaging 4.36 percent, an increase from the previous week's average 30 year rate of 4.30 percent. If you're searching for a conforming 30 year loan, you can still find some lenders quoting 30 year mortgage rates at 3.875 percent with points on MonitorBankRates.com.
Today's mortgage rates on 15 year conventional home loans are averaging 3.43 percent, a slight increase from the prior week's average 15 year rate of 3.41 percent. Currently on MonitorBankRates' loan tables there are many lenders quoting 15 year refinance rates well below the average rate of 3.43 percent. The lowest rates on our tables from banks and credit unions are just under 3.00 percent at 2.875 percent.
Since refinance rates have risen the past three months, you probably missed the refinance boat of locking in a lower rate on a loan. If you're thinking of refinancing from a 30 year mortgage to a 15 year mortgage, there is still time to do so. Although 15 year rates have also risen about 1.00 percent recently, you can still save lot of money in interest payments by refinancing to a shorter term loan.
30 year jumbo mortgage rates today are averaging 4.69 percent, up from last week's average 30 year jumbo rate of 4.61 percent. The lowest jumbo rates in our database this week are at 4.25 percent with points. The lowest 30 year jumbo rate without points in our database is at 4.375 percent.
Average 15 year jumbo mortgage interest rates are at 4.03 percent, an increase from last week's average 15 year jumbo rate of 3.98 percent. The best 15 year jumbo rates in our database right now are much lower at 3.50 percent with zero mortgage points.
Conforming 5 year adjustable mortgage rates are averaging 3.40 percent, a decline from last week's average 5 year rate of 3.42 percent. The lowest 5 year adjustable rates in our database are at 2.50 percent with points and at 2.625 percent without points.
5 year jumbo adjustable mortgage rates are averaging 3.20 percent, unchanged from last week's average 5 year jumbo rate. The best 5 year adjustable jumbo rate in our database right now is at 2.75 percent with no points.
Average Mortgage Rates