Rising Mortgage Rates: The Silver Lining
Rates for 30-year fixed mortgages rose again this week. Current rates have reached 4.41%, according to the Zillow Mortgage Marketplace, up from 4.28% last week.
“Rates remained steady for the second week in a row, alleviating some concerns that they would continue the upward surge that began early this summer,” said Erin Lantz, director of Zillow Mortgage Marketplace. “This week, although we expect continued volatility, we expect rates will remain fairly steady until a clearer picture emerges about the strength of the U.S. economic recovery.”
Many experts agree, however, that rates are likely to continue to climb. This has left potential buyers with some anxiety about their prospects of getting a good deal on a mortgage. Rising rates aren’t all bad news, however. Here’s the silver lining.
Today’s Rates Are Still Pretty Low
With so much excitement around activity in the market, it’s easy to lose sight of the context. Current mortgage rates, though higher than they were months ago, are still historically low. If you want to buy a home, an interest rate below 5% shouldn’t be much of a hinderance. Experts have also said that the rising rates shouldn’t stall the recovery of the housing market with so much demand still present.
The Economy is Improving
“Higher rates mean the economy is doing better, which is good for housing prices,” says John Walsh, president and founder of Total Mortgage in Milford, Conn. Interest rates are to our national economy. They were driven down in an effort to jumpstart our economy and it seems as though it’s working, at least in the housing market. Overall, an increase in interest rates signifies some optimism that consumers can afford them.
More Home Sales
Finally, one theory around rising rates is that it energizes potential buyers to make a decision. Everyone want to get the best possible deal on their mortgage and the possibility of higher rates will draw out serious buyers, pulling them “off the fence,” which should result in increased sales. For homeowners looking to sell, that’s great news. And currently, not only are home sales on the rise but also home sale prices.
Photo Courtesy, 401(K) 2012.