Austin Texas: The days of near 4% mortgage rates has ended after a rate rise since November 2010. Is this going to be good or bad?
30-year fixed mortgage rate has risen to 4.82% from 4.15%, according to Freddie Mac's weekly mortgage market survey. In another survey, the rate has risen to 5.02% -- crossing the 5% benchmark for the second time in three weeks after being as low as 4.41% as recently as early November.
Forecasters now predict them to remain between 5% and 6% for all of 2011.
The increase will push mortgage payments higher for buyers. When rates rise from 4% to 5% it takes away about 10% of buying power.
Higher interest rates may stimulate the quiet housing market which has not bottomed out. The rise introduces an element of urgency for homebuyers to rush before rates spurt even more.
The main problem in the real estate market is that banks to streamline their underwriting process and start releasing their funds to issue more loans and to be less stringent.
If lenders return to more normal underwriting standards for creditworthy buyers and there would be a boost to the housing market.
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