Mortgage Rates Rise From 4.29 to 4.51 Percent, Borrowers Not Discouraged
Fixed mortgage rates rose slightly last week from 4.29 percent to 4.51 percent, causing concern from some homeowners. The number of individuals looking to purchase a home, however, has not decreased, pointing to possible positive signs.
Signs of economic growth have continued as individuals continue to rebuild their lives following hardship. The number of borrowers seeking funds for a mortgage has continued to remain consistent, despite slight increases in mortgage rates.
"We still have a relatively large unclosed [mortgage] pipeline at the end of the quarter," Wells Fargo & Co. Chief Financial Officer Timothy Sloan told investors Friday, according to the Wall Street Journal.
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While higher rates would appear to be a negative sign for many borrowers, the increase in rates could proved that the economy is continuing to recover. The continued push for mortgages shows promise, say experts.
"Increases in rates would not be occurring if there wasn't economic growth, Steve Blitz, chief economist at ITG Investment Research, told Forbes. "If people thought the economy was heading south, even with absence of quantitative easing, the rates wouldn't rise."
Blitz pointed out, though, that the slight increases will not impact borrowers too sharply because mortgage rates overall are still at a historical all-time low. Current buyers in the market also appear more prepared to purchase a home.
"Buyers have higher than average down payments and credit scores, so the rising rates are not having much of an effect as the volatility in the home builders' stock prices suggest," Sterne Agee analyst Jay McCanless explained to Forbes.
The new rates reflect an estimated $200 difference per month, based on purchasing a home at around $300,000.
"If that makes a difference, you probably can't afford the home," Blitz told Forbes.
Those who are concerned, can still explore alternative mortgages that still offer rates beginning at 4.1 percent.
