Mortgage Rates Inching Up But Still Low-Economist
There has been a nervousness in the American stock market caused by movements by the Federal Reserve to inch interest rates up to keep inflation in check.
Rising interest rates also affect mortgages and home affordability. Even with slightly higher consumer borrowing rates, a spokesperson for Wisconsin Realtors Association says housing loans are still a bargain compared to past years and decades. Economist David Clark...
"...certainly mortgage rates have gone up, but they're still in the neighborhood of 4 percent. By historical standards, that is low. If you look at 30-year fixed rate mortgage where it stood at the beginning of January, it was just under four percent at 3.95 percent. By February it had moved up to 4.38 percent..."
Clark says by historical standards that rate is still low...
"....it's because the Federal Reserve has started moving up short term interest rates. They have a federal funds rate that they set is at 1.5 percent now. It was at 0.75 percent this time last year. The reason they've done that is that they're concerned about inflation...."
He says those Federal Reserve moves caused some sharp adjustments in the stock market. That also pushed up the long term rates. He says when lenders are providing 30 year loans they want to know what is happening with inflation. Clark says the moves by the Fed now are designed to keep inflation under control.
In January of 1985, 30 year fixed mortgage rates were more than 13 percent. By January of 2012, rates had dipped to under 4 percent.