Mortgage rates were up only slightly in last week’s Freddie Mac survey – staying under 5%, but by Friday most lenders were quoting over 5%. Bond prices plunged at the end of the week, forcing home loan rates higher.
The Federal Reserve is sticking to its announced plan to cease support of low rates via the purchase of mortgage-backed securities. With a year’s worth of purchases on the balance sheet, the Fed will become a seller of these securities at sometime in the not-too-distant future. When that happens, the supply will rise, forcing mortgage rates up further.
Lenders I’ve talked with are predicting 6% on fixed-rate 30-year mortgages by mid-summer. While in the big picture 6% isn’t bad (I purchased my first home at 8.25% and the next one at 14%), most buyers haven’t faced my “walked to school for a mile in the snow” first-hand and the increase is bound to have an impact on home sales.
Meanwhile, here are the numbers from last week’s national mortgage rate survey:
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