Call it a reversal of fortune, as mortgage rates finally edged upward, after a month-long run of sliding performance.
The shift comes after more talk among economists that the “Great Recession” is actually over. Stocks took their cue from the upbeat assessments of Wall Street gurus, and commodities like gold and oil shot upward thanks to a weaker dollar. Typically, as the dollar weakens, commodity prices rise, but not because there is excess demand for commodities.
But how does this affect real estate, you might ask? Wood, metal, aluminum, oil and gas are major commodities for the housing industry. But prices are up for these materials because the U.S. currency is in such a sorry state. That “dollar dodge” could mean that any perceived benefit from economic movement is a mirage, and that investors and homeowners shouldn’t get too excited about a possible boom in the housing market.
Still, rates were up across the board, dollar or no dollar, according to the BankingMyWay Weekly Mortgage Rate Tracker. Thirty-year fixed-rate mortgages rose to 5.17% from 5.08% for the week. Fifteen-year fixed-rate mortgages took a similar path, rising to 4.67% from 4.57%, while three-year and five-year ARMs also shot upward to 4.72% and 4.54% from 4.55% and 4.48%, respectively.
Even though rates were up, they weren’t up far enough to discourage mortgage borrowers – especially refinancers. According to the Mortgage Bankers Association, refinancers led the charge last week, accounting for 60% of all mortgage applications. New homebuyers were down by 5%, the MBA reports.
One key metric to look for this week is the University of Michigan’s Consumer Survey. Consumers are being spoon-fed increasingly optimistic economic news by the powers-that-be, but they don’t seem to be buying it. Analysts expect a 74.0 reading for September following August’s 73.5, but don’t be surprised if the genuine number clocks in lower, possible down to 69 or 70. If consumer sentiment is down, any talk of economic recovery is very likely premature.
Still, mortgage consumers have to be pleased, relatively speaking. In 2008 at this time, the average 30-year mortgage rate was at 6.46% - more than 100 basis points higher than the rates we’re seeing now. With no major imminent rise in rates, it’s still a good time to get a new mortgage.
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