Mortgage Rates Rise Above 4 Percent
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UPDATED: Mar 22, 2012
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At their highest point in five months, the average interest rate for a 30-year mortgage loan increased to 4.08 percent. Last week, the average rested at 3.92 percent, meaning rates rose by an alarming 0.16 percent in just a week’s time.
The 30-year average is the highest since Oct. 27, when it hit a height of 4.1 percent.
Home loan applications fell for a sixth week in a row, indicating an enormous slump in the refinancing market.
This refinancing slump is particularly worrying for some since the governments new HARP 2 just went into full affect this month. HARP 2 was supposed to encourage the nation’s underwater mortgage loan holders to refinance their home loans. Instead, however, the nation has entered the largest refinancing dip since November.
But despite these ominous signs, some experts believe there’s no reason to worry.
“The effect of higher rates should be minimal as long as the increases are limited,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto in an interview, according to Bloomberg Businessweek. “Refinancings could take a further hit but they’re up hugely in the past year. I doubt applications for purchases of a home would be affected much. Affordability has never been better.”
Guatieri’s assessment of affordability may be a bit of an exaggeration, but affordability is definitely growing at a steady pace. According to Reuters, the number of new unemployment benefits claims dropped to a four-year low last week, signaling an increase in jobs availability.
The Reuters report stated employers added 227,000 jobs to their payrolls in February, bringing the new job total over the past three months to an encouraging 734,000.
The more accessible jobs are to the American public, the more easily the nation can afford new home loans—even at 4 percent interest rates.