Mortgage Rates on the Rise

[Aug 24, 2007.]

 

A new report shows that mortgage rates are once again heading upward.

The mortgage firm known as Freddie Mac reports that interest rates on a 30-year, fixed-rate mortgage are now averaging 6.62%. That's up from 6.59% the previous week. That 6.59% rate was the lowest rate posted since the beginning of June.

The increase in mortgage rates is being blamed on changes in financial markets. One culprit appears to be the interest rates on 10-year Treasury securities, which have a great deal of influence on mortgage rates. So far, however, the troubled subprime mortgage market has not negatively impacted the conventional loan market.

Meanwhile, the rate on a one-year, adjustable-rate mortgage has risen from 5.65% to 5.67% over the past week. Last year at this time, the rate on a 30-year mortgage averaged 6.52%, with one year adjustable-rate mortgages topping out at 5.65%.

The increase in the mortgage rate is just the latest negative news for the housing industry, which is in the midst of national turmoil. The current housing market appears to be overburdened, with a glut of properties on the market. Home prices have been falling, creating a difficult situation for home sellers. In addition, a number of lenders are tightening standards for home loans, making it more difficult for prospective homebuyers to secure loans.

Still, the end of the dark tunnel may be in sight for those who work in home construction and housing sales. Analysts are predicting that the housing picture will brighten in 2008 after 2007's abysmal record. Fortunately, the housing slump appears to have had negligible impact on the rest of the economy. Economists had feared that housing market troubles could lead to all-out recession but, thus far, such a dire scenario has been averted. Improving prospects for the housing industry could mean better sales for home improvement stores, hardware stores, carpet stores, and other businesses that are related to the real estate market.

Julie Ann Amos
August 24th 2007

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