Don’t look now but mortgage rates are going up
Bailout News, Politics, California Housing Crash, Florida Housing Crash, The Economy, Real Estate October 16th, 2008
More bad news for the housing market. Now that banks are actually requiring down payments and verification of income (what a concept!!!), mortgage rates are going up, even as the Fed desperately tries to bring short term rates to zero.
According to CNNMoney:
Mortgage rates spike - biggest jump since ‘87
NEW YORK (CNNMoney.com) — Low mortgage rates, the one bright spot in a devastated housing market, are on a rapid rise.
Freddie Mac reported Thursday that the average 30-year fixed-rate mortgage has hit 6.46% - up from 5.94% the week earlier. That represented the largest weekly increase since April 1987, when the 30-year rose 0.84 points.
Bankrate.com also charted the spike. The investment Web site reported that the average interest rate on a 30-year, fixed-rate mortgage jumped to 6.74% on Wednesday from 6.2% the Wednesday before.
Translation: A borrower with a $200,000 mortgage would pay about $1,225 a month at 6.2%, and $70 more, $1,295 at 6.74%.
This is what Bankrate says:
Mortgage rates skyrocket
Mortgage rates skyrocketed this week as Wall Street tried to discern the ever-shifting contours of the Great Bailout.
The benchmark 30-year fixed-rate mortgage rose 54 basis points to 6.74 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week’s survey had an average total of 0.42 discount and origination points. One year ago, the mortgage index was 6.16 percent; four weeks ago, it was 6.49 percent.
Obviously, whatever Paulson and Bernanke are doing is having unintended consequences. As we all know, at the end you can’t stop free markets from doing their work. Home prices need to come down and there is nothing the government can do to stop that.
