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Why did rates jump so high???

June 15, 2009 by staff · Leave a Comment

Consumers have gotten so used to hearing about rates below 5% that it is shocking how they could jump from 4.75% on a 30 year fixed rate mortgage up to 5.75%. It seems to have happened overnight!!
Since May 21st the move has been pushing home rates to the highest level since December. Fears of future inflation and added supply have been the culprits behind the recent sell off of mortgage backed securities.

The market volatility is very high and conditions may change rapidly during the day. Remember the market can change daily even hourly. This may make shopping for that perfect rate a little challenging. While lenders may quote a rate in the morning it can change by afternoon depending on market and economic reports and conditions.

With rates going up is it still a good time to buy??? YES! Most consumers have conditioned their mind to think of rates at 4.75% or lower and 5.75% seems unbelievable but remember we are still in historic times for home mortgage rates.

Only 15 years ago in January 1993, the average rate for a 30 year fixed mortgage was 8.12% and 20 years ago in January 1988, 10.55%. Even those rates seem low though when considering the average interest rate for a 30 year fixed mortgage in January 1983 came in at a whopping 13.40%.

There hasn’t been a better time to buy a home or a first time homebuyer with the $8,000 tax credit that is now offered.

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