Higher mortgage rates fuel housing market

June 3rd, 2013

Mortgage rates increased slightly this week, but still remain low, prompting buyers to enter the housing market.

Average rates for 30-year fixed-mortgages are up to their highest level in a year, creating somewhat higher costs for potential buyers. The new average rate is now 3.81 percent, up from the record-low rate of 3.31 percent set in November 2012.

The average rates for 15-year fixed-mortgages are up as well, now resting at 2.98 percent over last week’s 2.77 percent. After the historic lows hit throughout 2012 and in April 2013, these increases are not surprising. Lower rates have fueled buying in the housing market, strengthening overall economic recovery.

Although rates are on the rise, they still remain historically lower than average – as recently as 2000, 30-year fixed rates exceeded 8 percent, and with mortgage rates at this level, homes are still more affordable to larger portions of the population. Home prices are rising, too – in conjunction with the uptick in mortgage rates, some prospective buyers tend to become nervous and miss valuable real estate opportunities.

Professionals in the real estate industry, though, project that these rates are still likely to drive sales forward. Syd Leibovitch, President of real estate firm Rodeo Realty in Beverly Hills, told the Los Angeles Times that more buyers will continue to enter the market.

“These are going to be the lowest rates that they have seen, that their children have seen…. They are never going to believe they were this low,” Leibovitch told the source.