The average rate for a 30-year mortgage soared half a percentage point in the last week, the biggest one-week leap since 1987.
rate went from 3.93% to 4.46%, the highest rate since July 2011. This
is the first time the rate has gone above 4% since March 2012.
analysts don’t expect higher interest rates to hurt the housing
recovery, though they do believe rising rates will help tamp down
Higher mortgage rates are "not going to snuff out the housing recovery," Paul Diggle, property economist for Capital Economics, told Bloomberg. "But it’s another reason to expect a slowdown from the very rapid rate of price rises of late."
firm, which had been predicting that mortgage rates would be 3.75% next
year, upped its prediction to 5% -- still lower than rates were during
the real estate boom, Bloomberg reported.
The rate for a 15-year mortgage rose from 3.04% to 3.5%, according to Freddie Mac’s Weekly Primary Mortgage Market Survey.
The impetus for the rise in rates appears to the Fed’s indication that it will cut back on bond purchases.
higher interest rates means higher house payments, rates still remain
at historic lows. The rate would have to rise to nearly 7% before a home
priced at the U.S. median would be unaffordable to a family making the
median income, according to Freddie Mac’s June 2013 U.S. Economic & Housing Market Outlook. However, rising rates will affect affordability in some areas long before they hit 7%.
mortgage rates may dampen some housing market activity but the effect
will be muted by the high level of buyer affordability, and home sales
should remain strong,” Frank Nothaft, vice president and chief economist
at Freddie Mac, said in a statement.
The 30-year mortgage rate was 7.33% when Freddie Mac began its weekly survey
in April 1971. Rates reached 18.63% in 1981. During the mid-2000s real
estate boom, mortgages rates were in the 5% to 6%-plus range. The rate
first dipped below 5% in January 2009.