Mortgage Rates Hit 6 Month High

Last week marked a peak in mortgage rates nationwide that could have potential home buyers wondering if the days of record low rates are gone.

This chart from BankRate.com shows the up, down trend since September ending with a peak last week that analysts predict could indicate the beginning of the end of low rates.

In part the spike may be connected to Washington’s agreement to extend the tax-cuts. The news caused financial markets to react by increasing the yield on benchmark on 10-bonds 21 basis points last week. Treasuries, especially the 10-year bond, largely influence mortgage rates, and so borrowing costs for mortgages have gone up. The average rate for a 30-year fix loan increased to 4.61% last week ended  from 4.46% the previous week, following a fourth week of increases, according to Freddie Mac (FMCC). The average 15-year rate rose to 3.96% from 3.81%. These are the highest rates since June.

Meanwhile, once the First-Time Homebuyers tax credit expired the housing market to slow since buyers had little motivation. Consumers may have also been playing a waiting game to see how low rates could go. This resulted in overall losses in home sales. According to Zillow.com home prices have lost $1.7 trillion in value over the past year.

What this means for you is that if you’ve been thinking about buying a home, but have been one of the low-rate game players, it may be time to act. Home prices are still low, but with rates rising the opportunity to get the sweet combination of low prices and low rates is fading. Many financial experts believe we have seen the bottom of lending rates.

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