July 10th, 2013
This year has seen quite volatile mortgage rates. After hitting record lows in May, rates have been moving back up at a fairly rapid pace. At the end of June, the average rate of a 30-year fixed mortgage reached a two-year high of 4.46 percent, according to Freddie Mac. This was the greatest increase the United States has experienced in 26 years, according to Bloomberg.
Following the spike in June, interest rates lowered slightly to 4.29 percent during the first week of July.
The overall jump in rates has made it more expensive to buy a house than earlier in the year, but reports show purchasing real estate is still cheaper than renting. Fortunately, the recent recovery of the housing market has allowed a cushion when it comes to rising mortgage rates. According to Forbes, sales prices have fallen so much and mortgage rates are still relatively low enough that these figures are cost effective when compared to rents in the country.
One impact of the increase in mortgage rates, however, is that refinances have dropped. According to Bloomberg, the MBA index of refinance applications fell 15.6 percent during the week ending June 28, hitting the lowest level since July 2011.