For the last half of 2010, analysts predicted that the 30-year mortgage rate would hit above 5% during early 2011 and steady somewhere below 6% by the end of 2011. That prediction has come to pass when recently the average on a 30-year fixed rate mortgage jumped to 5.05% for the week ending Thursday February 10.
According to data released in Freddie Mac's weekly survey, for the week ending Thursday February 10th, the average for a 30-year fixed-rate posted at 5.05%, an increase of almost a quarter of a percent when compared to the previous weeks posting of 4.81%. The nation has not seen them this high since the spring of 2010. The recent porting is the highest rate posted since April 2010. The average rate declined sharply after April to hit a record low of 4.17% in October before its steady ascent.
This sharp rise has caught many economists and investors by surprise. The Federal Reserve will be closely watching the these numbers closely because of the money invested by the government in Treasury bonds in an effort to keeps these rates low to bolster the economic recovery of the housing industry.
The recent increases in the percentage is a direct consequence of the escalation in the U.S. governments borrowing costs. They are in direct correlation with 10-year Treasury note yields, which has risen sharply in recent months.
There are buyers out there that can easily handle the increase in the mortgage rates; however, the recent increase will force others off the fence. First-time buyers could be forced into buying now rather than waiting for more favorable market conditions because they already usually have to pay higher down payments and fees than previous homeowners.
Freddie Mac's weekly survey of mortgage rates for the week ending Thursday February 10 posted the 30-year fixed-rate average at 5.05% and the 15-year fixed-rate average at 4.29%. Both rates showed a week over week increase.
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