Mortgage Rates Climb to 7 Year High

Mortgage rates have risen for five straight weeks pushing them to the highest levels since early in 2011.

The 30-year fixed average stands at 4.72 percent, according to data from Freddie Mac. That represents an increase of nearly a full point from this time last year when rates for 30-year mortgages stood at 3.83%.

15-year loans also increased to an average of 4.16% compared to 3.20% in September 2017. Five-year adjustable rates rose to 3.97%. Last year at this time, 5-year adjustable mortgage rates were at 3.2 percent.

The Federal Reserve also announced this week that it was raising interest rates for a third time during 2018. This time it was a quarter-percentage point increase. Mortgage rates hit the seven-year high before the Fed unveiled its interest rate increase and may push mortgage rates even higher. For those with adjustable rate mortgages (ARMs) and home equity credit loans (HELOCs), monthly payments may rise depending on the terms of your loans, states FinanceNize.

Homeowners with hybrid ARMS that include automatic adjustment clauses will see an increase at their next loan adjustment period. If homeowners are nearing the end of your initial rate lock period, such as being in the fourth year of a 5/1 ARM, they may want to consider refinancing options to take advantage of what still are traditionally low rates under 5%.

Buoyed by a strong economy and the expectation of even more short-term rates hikes by the Federal Reserve, mortgage rates are expected to continue to rise. Freddie Mac, more formally known as the Federal Home Loan Mortgage Corporation, purchases mortgage loans from banks and other lenders in order to make more capital for loans available, predicts mortgage rates will rise to an average of 5.1% in 2019 ending 4th quarter with rates as high as 5.4 percent.

With 2018 looking to finish with 6.3 million homes sales in the U.S., 2019 is expected to show modest growth in sales figures with 6.44 million homes sold. This would represent the third straight year of home sales increases. The number of homes sold in 2017 was 6.12 million. Sales next year will be driven primarily by new construction. Freddie Mac predicts that new housing construction will continue to increase, but sales may slow in the existing home market.

Freddie also finances and guarantees billions in apartment properties as well. They are rolling out a new loan program for owners who agree to cap rent increases for the life of their loans.

In addition to strong economic news, consumer confidence is at its highest point in the past 18 years.

Melissa Thompson
Melissa Thompson writes about a wide range of topics, revealing interesting things we didn't know before. She is a freelance USA Today producer, and a Technorati contributor.