Florida Home Loan Rates Rise For Fourth Consecutive Week; More Hikes Could Follow

As expected, Florida mortgage rates moved higher for the fourth consecutive week, responding quickly to the reintroduction of 30-year Treasury notes and testimony by the brand-new chairman of the Federal Reserve.

The 30-year, fixed-rate mortgage (the industry’s benchmark) has risen a quarter of a percentage point in the past four weeks, including .05 percent this past week, resulting in a national average of 6.37 percent, according to Bankrate.com. The mortgages in this week’s survey averaged a total of 0.37 discount / origination points. A year ago at this time, the average mortgage rate was a historically low 5.62 percent.

• The 15-year fixed-rate mortgage, meanwhile, rose by .07 percent to 6.02 percent.
• The 5/1 adjustable-rate mortgage (ARM) to 6.05 percent from 5.99 percent a week ago.

New Fed Chairman Ben Bernanke observed this week that a number of indicators point to a slowing in the housing market. That’s no surprise to economists, who have been anticipating a slowdown for years. But Bernanke, who recently took over for the retiring Alan Greenspan, has his eye on a scarier scenario than many have predicted: a combination of factors leading to the rapid deceleration of prices and construction.

That would result in less borrowing against home equity and reduced spending by homeowners in general — something neither the industry or the Fed wishes to see happen.

The National Association of Realtors, meanwhile, reported that median home prices went up in double digits last year in half of the metropolitan areas that the group surveys — with the Florida housing market leading the charge. Of 145 metro areas surveyed, prices rose by double digits in 72 of them. The top six, in terms of median price appreciation, by percentage:

• Phoenix, Arizona: 48.9 percent.
• Cape Coral-Fort Myers, Florida: 48 percent.
• Orlando, Florida: 42 percent.
• Ocala, Florida: 41.2 percent.
• Tampa-St. Petersburg, Florida: 32.3 percent.

If they continue at this pace, increasing mortgage rates are likely to quell demand for loans across Florida. Most experts have predicted that rates would rise to only 6.5 or 7 percent this year, but that’s all speculation. The single greatest factor in how much the state’s housing craze cools off this year will be how high Florida home loans rise, so monitor the situation if you are thinking about buying or selling.