Up, up and away?

Mortgage rates are climbing.

CHFA’s rate jumped to 6.125% yesterday - not bad but it hurts if you started looking for a house in the early spring when the rate was 5.375% and housing still costs the same, and maybe a little more.

Conventional mortgage rates average about 6.74% for a 30-year fixed rate loan.

As far as the future of mortgage rates…

According to one article I read on CNN/Money,

Doug Duncan, chief economist for the Mortgage Bankers Association (MBA), expects mortgage rates to top out near 7 percent by the end of the year.

And according to Kiplinger’s,

…expect the Fed to hold short-term interest rates steady. Although inflation is higher than Fed officials would prefer, they know that a rate hike now would send the housing market into a deeper slump and threaten the already weak economic expansion.

In fact, the recent spike in long-term interest rates — which are determined by the bond market, not by the Fed — will penalize the housing sector by cranking up mortgage rates and thereby sapping demand. Homeowners with floating rate mortgages and home equity lines of credit will also have to grapple with higher interest payments.

About $650 billion worth of floating rate loans will be reset from their low introductory rates to market mortgage rates between now and the end of next year. Market rates have risen about a half a percentage point just since mid-May, with the popular 30-year fixed mortgage currently at around 6.74%, a two-year high.

 When I bought my first home (way back in 1999? I think), my rate was about 7%.  That was when the rates were falling.  But, housing costs have increased significantly since then.  The house I bought in 1999 for $150,000 at 7% would sell for $280,000 now – with no updates and the real estate taxes have more than doubled.  Amazing.