Mortgage Rates Hit Highs
We haven't seen rates this high in 4 or 5 years. Freddie Mac says the average 30-year fixed rate among the lenders it surveys was 6.49 percent. Rates are now at the July 2002 level, when the monthly average was also at 6.49 percent. But the change is not only in the fixed rate mortgages. There are also the new rates on ARMs. The 1-year adjustable rate mortgage hit its highest level since August 2001 when the average for the month was 5.71 percent. The current level is 5.61 percent.
Now, there's no need to panic just yet -- but it does seem to be another indicator of higher interest rates, both for ARMs and fixed rate mortgages. This could put pressure on housing prices to moderate, as rising mortgage rates definitely affect what the buyer can afford.
It's making my wife and I think twice. After all, how far do we want to stretch the family budget when we have a new baby in the house? What if the house prices fall right after we buy? Do we want to pay a higher interest rate in order to lock in for longer and avoid a mortgage renegotiation problem if prices do fall?
Despite falling in love with a house that we saw on our recent binge of open-house hopping, we're taking our time. We're getting pre-approved for our best rate, and we're waiting to see if a little time on the market will bring down the price of our favorite house.