Mortgage Interest Rates Are On The Rise

Interest rates have reached a 6 month high for 30 year loans, with an average rate of 3.63%, up from last week's average of 3.52%.  For comparison, in November-December 2012 the rates were at a 3.35% national average. The average 15 year rate also saw a small increase from 2.76% to 2.79%.

The main contributors to the increase are the improved economy and the drop in unemployment rates.  In fact, unemployment rates dropped below expectations to 7.7%.  The short version of why these indicators affect interest rates, is due to consumer confidence and the obvious fact that if more people are working, there will be more people with the ability to make a home purchase.

So, what this means for a home buyer is that interest rates are on the rise.  They fluctuate daily and we will see peaks and valleys, but the rates will be trending upward as the economy improves.  That is why this year would be a great time to consider making a home purchase.  Economists are projecting that rates will reach 4% by year's end.  It's still a fantastic rate, but as the rates increase, it will affect a buyer's purchasing limit.

For sellers, we are seeing in most communities, that there is high buyer demand due to the rising rates and not enough homes for sale yet to meet the demand.  When there is high demand and lower supply, that indicates a trend leaning toward a seller's market.  That is why we are also seeing a slight increase in home sales prices, shorter days on the market and multiple offer situations on homes. 

This is a very exciting point-in-time where a homeowner can experience a better seller's market, and still take advantage of the low interest rates and great sales prices, before we see further increases in those rates and prices.  I would enjoy speaking to anyone considering a move, to discuss the local market and how it affects your specific situation and needs.