Mortgage Rates Continue to Tick Upward

30-year fixed rate mortgages moved to 6.49% this week, according to this article on washingtonpost.com. Rates haven't been this high since July 2002. The article goes on to say that some economists believe interests rates will hit 7% by year's end. What does that mean for the prospective home buyer? Consider this: if you are looking to purchase a $500,000 home with a 5% down payment and an interest rate of 6.49% with no points, you are looking at a monthly mortgage payment of about $3000. If you wait until the end of the year, at a rate of 7% holding everything else constant, the monthly payment climbs to about $3160. If you can double your down payment by then to 10%, you're back at $3000. What does this tell us? Nothing, really, I just wanted to know.

Not surprisingly, the upward trend in mortgage rates is coinciding with an increase in the number of foreclosures seen of late, as described in this article at philly.com. Those who have been predicting a bubble burst are likely holed up in their fallout shelters with a smug I-told-you-so look on their face. It is important to note, however, that foreclosure rates have been uncommonly low in recent years and while this slight increase could be viewed as a prelude to the apocolypse, a more rational take would be that foreclosure rates, like home prices, sales, and average days on market numbers are softly returning to normal after a period of abnormality. From the article:

In the past several years, foreclosures across the United States have been hovering around historically low levels, as home prices have risen nearly 50 percent in five years. This appreciation enabled troubled borrowers to sell their homes relatively easily to resolve mortgage difficulties.

Now, a survey of the latest data confirms, that's starting to change, with an uptick across the United States in foreclosure rates and mortgage delinquencies (or late mortgage payments). But even the new higher rates of foreclosure and delinquencies are still low in historic terms.

Let's everyone stay calm.