Rates of Florida Home Loans Soar

Grab that home while you can.

That sums up the Florida home loan market this week as rates continue to rise, making borrowing costs more expensive. Mortgage applications surged upward for a second straight week as consumers looked to lock in loans. The reason? Florida home loan rates rose to a near four-year high, according to USA Today.

The Mortgage Bankers Association’s seasonally-adjusted index of mortgage application activity for the week ending March 31 increased 7.2 percent to 612.8. Borrowing costs on 30-year fixed-rate Florida home loans (the most common mortgage option and industry standard), excluding fees, averaged 6.49 percent, up 0.13 percent from the previous week. Rates are now at their highest level since June 14, 2002, when they hit 6.53 percent.

The 2005 low for fixed, 30-year Florida home loan rates was 5.47 percent in June. Meanwhile, the association’s seasonally-adjusted mortgage index — widely considered a timely gauge of home sales — rose to 438.2, up from the previous week’s 404.1, but below its year-ago level of 446.0. At the same time, the group’s seasonally adjusted index of refinance applications increased 5.3 percent to 1,640.8, its first gain in four weeks.

The refinance share of overall U.S. mortgage activity decreased to 36.6 percent of total applications from 37.3 percent a week ago. It was the lowest refinance share since the week ended July 30, 2004, when the index showed 35.8 percent. Historically low Florida mortgage rates have fueled a five-year housing boom, helping support the national and local economies during what would have been a recession, despite uncertain business investment.

Analysts differ on whether a housing bubble exists, but most agree that the market is cooling. Fixed-rate, 15-year Florida home loan market experienced a similar jump, ending the week at 6.15 percent after finishing the previous week at an even 6 percent. Rates on one-year adjustable-rate mortgages (ARMs) increased to 5.96 percent from 5.83. As the Federal Reserve continues its interest rate hikes, have we seen the last of weeks like this? It looks increasingly doubtful.