Inflation Worries Propel Florida Home Loan Rates To Four-Year High
Purchasing a house just got a little more expensive for most buyers. With investor fears regarding inflation continuing to surface, Florida mortgage rates rose to their highest level in more than four years.
Freddie Mac reported Thursday that rates on 30-year, fixed-rate mortgages (the industry benchmark) rose to a nationwide average of 6.71 percent, up from 6.63 percent last week. It was the highest level for the 30-year loans since they averaged 6.76 on May 31, 2002, according to the Washington Post.
The housing market is slowing this year under the impact of rising mortgage rates, after five boom years powered by some of the lowest rates in four decades. Analysts are predicting that sales of new and existing homes will decline by more than 10 percent as borrowing costs on Florida home loans make home ownership even more of a challenge.
A variety of mortgage types saw rates increase this week, gains that were attributed to growing worries about inflation and the likely reaction to those concerns by the Federal Reserve, which will convene next week. Most experts now view it as a virtual certainty that the central bank will bump up primary interest rates for the 17th consecutive time.
“Financial markets believe that the current rate of inflation is above the Fed’s comfort zone, which will lead to more rate hikes in the near future,” said Freddie Mac’s chief economist Frank Nothaft.
Markets are not only expecting a June hike, but there is growing concern the Fed will also raise rates at its August meeting as well.
Rates on 15-year, fixed-rate mortgages, a popular choice for refinancing a Florida home loan, increased to 6.36 percent, up from 6.25 percent a week ago. Rates on one-year adjustable rate mortgages rose to 5.75 percent, up from 5.66 percent last week and the highest level since the 5.77 percent registered the week of Aug. 3, 2001.
Rates on five-year adjustable-rate mortgages, which start out lower than fixed-rate mortgages before adjusting after a pre-determined period, climbed to 6.32 percent, up from 6.23 percent. The mortgage rates listed above not include points, which averaged 0.5 point last week among 30- and 15-year home loans.
A year ago, 30-year mortgages averaged 5.57 percent, 15-year mortgages stood at 5.16 percent, one-year ARMs came in at just 4.23 percent, while five-year ARMs averaged 5.05 percent.
