Mortgage Rates Hit Four-Year High

Real estate analysts are offering mixed views on whether or not this is a good time to look for a Florida home loan. In some cities, sellers are actually offering hopeful buyers unique incentives, but recent news about Florida home loan rates will affect all interested individuals.

According to Freddie Mac, rates on 30-year mortgages climbed this week to their highest point in nearly four years, a development that could put a further crimp in housing activity.

The mortgage company reported Thursday that rates on 30-year, fixed-rate mortgages averaged 6.49 percent for the week ending April 13. That was up from 6.43 percent last week and was the highest since mid-July of 2002.

As Wall Street investors worried that an improving jobs climate could drive up wages and thus inflation, those fears were fanned by a government report last week showing the unemployment rate dropping to 4.7 percent in March. This wouldn’t bode well for Florida home loan seekers.

“The threat of higher inflation, as we all know, invariably leads to higher mortgage rates,” said Frank Nothaft, Freddie Mac’s chief economist.

Some economists believe rates on 30-year, fixed home loans could reach 7 percent by the end of this year. There are signs that rising mortgage rates are slowing the housing market, which registered record-high sales for five years in a row.

“If the past is any guide, the effect of rising interest rates is likely to be felt most visibly in housing markets,” Federal Reserve Governor Donald Kohn said in a speech Thursday.

Sales of existing homes are expected to fall by 6 percent this year compared with 2005, while new home sales are expected to drop by 10.9 percent, based on figures from the National Association of Realtors.

Home prices, which have posted double-digit gains in past years, aren’t expected to go up nearly as much this year. This would lead to a buyer’s market and a prime time to be looking into a Florida home loan. Here are other projections:

• The association predicts the nationwide median prices for an existing homes will increase 6.4 percent this year, while the median new home price will rise 2.3 percent.
• Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a Florida home loan, averaged 6.14 percent this week, up from 6.10 percent last week.
• One-year adjustable rate mortgages increased to 5.61 percent this week, compared with last week’s 5.57 percent. Rates on five-year, hybrid adjustable-rate mortgages averaged 6.13 percent this week, up from 6.11 percent last week.

The mortgage rates do not include add-on fees, known as points. Thirty-year mortgages carried an average nationwide fee of 0.6 point. Fifteen-year mortgages had a fee of 0.5 point, one-year ARMs carried a fee of 0.8 point and five-year ARMs had a fee of 0.7 point.

As Florida home loan rates inch higher and higher, you should be contemplating numerous options. It doesn’t mean that now is a bad time to buy because sellers may be willing to offer other deals or incentives.