FSBO Service Net QUICK TIP! Be sure to read: Common Home Seller Mistakes to learn why home buyers benefit the longer a home has been on the market!
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June 28, 2006
The Mortgage Bankers Association (MBA) reported today that fixed-rate thirty year interest rates on home loans have reached the highest rate in four years (since April 2002) -- and home loan rates are expected to go even higher as the Federal Reserve continues to tighten credit lending and their interest rates.
The MBA reported in their Weekly Mortgage Applications Survey for the week ending June 23 that fixed-rate mortgages increased to 6.86 percent from 6.73 percent on average for a thirty year loan. The percentage of buyers opting for adjustable rate mortgages dropped .5 percent from the previous week.
As rates go higher, some buyers are more likely to choose fixed rate mortgages if they cannot find ARM rates (adjustable rate mortgages) substantially lower than fixed rates, while other buyers with excellent credit may be able to find much better, lower rates for ARMs. Those deals can be good for buyers in a buyers market, particularly if the rate remains significantly lowered with no right to increase the rate for a substantial amount of time, such as the first five to seven years.
One headline proclaimed: "Surging interest rates scare off borrowers." The good news for buyers is that in a market where fewer buyers are buying homes because rates and prices have increased, they may be able to find lower prices and other good deals from sellers and lenders, especially from sellers whose homes have been on the market for a 'higher than average length of time' for their market.
Loan points on fixed rates (points are also know as origination points) decreased slightly, while points on Adjustable Rate Mortgages increased. ARMs are at their highest point (an average of 6.36) since 2001.
Points are additional percentage points based on the mortgage loand and are fees charged by lenders to increase the lender's profit, increase cash flow for the lender and which also increase the buyer's overall annual percentage rate.
The MBA website is www.mortgagebankers.org