Mortgage rates inch up…..but still are affordable


Mortgage rates inched up this week to land at 4.520%.  The one basis point rise in week over week reporting is not the biggest news.  The rate represents the benchmark thirty-year conventional mortgage.

(Photo by Mannie Garcia/Bloomberg via Getty Images)
(Photo by Joshua Roberts/Bloomberg via Getty Images)

 

Low rates do not mean a thing if you can’t find an affordable home!

 

Affordability index

 

For most homebuyers or even those wishing to take advantage of low rates, the trick is having the credit to quality and having the down payment (or sufficient equity).  Recently, another element has been added to the equation of securing a home; finding an affordable property.  For many the reality of an “average home price” results in sticker shock.  Some parts of the country have the price well over $500,000, and that is for first-timers!

The result of would be buyers remaining on the sidelines is a reduction of mortgage applications.  If the pace continues, expect lenders to trim staffing so their operations are “right-sized.”

 

Rates are cyclical and while many in the public policy arena tout a positive economic environment, for homebuyers that news triggers higher interest rates as well as higher home prices.

 

Here is a snapshot of this week’s rates:

August 30, 2018

30-Yr FRM 15-Yr FRM 5/1-Yr ARM
Average Rates 4.52 % 3.97 % 3.85 %
Fees & Points 0.5 0.5 0.3
Margin N/A N/A 2.77

Freddie Mac is an institutional investor and provider of mortgage funds to local lenders who work with consumers but sell the mortgages to them.  Each week they publish the mortgage market rate survey which is data obtained from a sample of their pool of lenders.

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