Mortgage Rates Hit Seven-Year High

Mark Livingstone on Twitter: “Mortgage rates go up like a rocket, but come down like a parachute, no worry here, with low inventory and record appreciation there are those that will be taking out #mortgage loans #RealEstate”

Mortgage rates this week jumped to their highest level since 2011, signaling a shift from a period of ultra-cheap loans to a higher-rate environment that could slow home price appreciation and squeeze first-time buyers.

The average rate for a 30-year fixed-rate mortgage rose to 4.61% this week from 4.55% last week, according to data released by mortgage-finance giant Freddie Mac.

The jump this year reflects an abrupt departure from a long period of declining rates that began during the financial crisis. Rates bottomed out in late 2012 at 3.31% and clocked in at 3.99% as recently as January.

The spike this year has been faster than many economists predicted as a surging economy, the prospect of wage gains and a steep rise in prices for commodities such as lumber and gasoline stoke inflation worries.

“There’s been a regime shift in the way the market is thinking about rates. We’ve been waiting for the period [of higher rates] for a while and now it’s finally happening,” said Sam Khater, chief economist at Freddie Mac.

The concern among economists is that higher rates will prompt homeowners to keep their low-rate mortgages rather than trade up for better properties. As rates approach 5%, the risk of the phenomenon known as rate lock grows, economists said.

Read the full report from The Wall Street Journal.

 

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