Rates for Fixed Mortgages Go Up

It looks like the time for mortgage rates below five percent are over…at least for the time being According to recent reports, the average rate for a 30-year fixed rate mortgage jumped up to 5.08%. In a twist in the industry, however, the rates for adjustable loans decreased over the past week.

The average for a 30-year fixed-rate mortgage last week was about 4.99%. The rates have stayed fairly steady for several months, though, as the average rate for a 30-year fixed mortgage at this time last year was about 4.78%. The rates for a 15-year fixed rate mortgage at the end of last week were about 4.39%, which is an increase of about .05% from the week before. However, those numbers are lower than the ones from a year ago. Last year at this time, the average rates for a 15-year fixed mortgage were 4.52%.

According to analysts in the mortgage field, the upward swing in mortgage rates is likely to continue for the rest of the year. By the end of 2010, some expect the mortgage rates to be as high as six percent. Part of the reason for the increase is due to the fact that the Federal Reserve has planned on ceasing their purchases of mortgage-related securities. The Feds stopped doing that at the end of last month but they have been talking about doing it for months.

Increasing interest rates are not good for the overall housing market. Everybody knows how vulnerable that industry is right now and the government’s pullout of support is going to make the mortgage industry even less stable than it already is. What makes the situation even worse is that we are entering into the spring months, which is the industry’s most vital period for selling homes. It looked as though we were on our way to a recovery in the last few months of 2009 with a resurgence in home sales, but those numbers began to drop off at the beginning of the year and the rising mortgage rates are only going to make those number fall even further.

On the bright side, however, there has been a glimmer of hope in the mortgage industry. There has been an increase in demand for home purchase loans which is often a signal of home sales in the months to come. According to the Mortgage Bankers Association, the number of mortgage applications in the United States increased for the first time in three weeks to its highest level since late 2009.

So while things are looking bleak on one end of the mortgage industry, there is still a shimmer of hope in another aspect. Only time will tell how the whole situation is going to end up.