Surge in mortgage rates may nudge homebuyers

By Qiong (June) ZhangNo Comments

http://seattletimes.com/html/businesstechnology/2021284571_mortgageratessurgexml.html

Mortgage rates have suddenly jumped from near-record lows and are adding thousands of dollars to the cost of buying a home.

In the short run, the spike in mortgage rates might be causing more people to consider buying a home soon. Rates are still low by historical standards, and would-be buyers would want to lock them in before they rise further.

But eventually, more expensive home loans could price some people out and slow the housing market’s momentum.

Mortgage rates are rising because they tend to track the yield on the 10-year Treasury note, a benchmark for most long-term interest rates.

A buyer who locked in a 3.35% 30-year rate in early May on a $200,000 mortgage would pay $881/month, according to Bankrate.com. The same mortgage at a 4.46% rate would run $1,008/month. The difference: $127 more a month, or $45,720 over the lifetime of the loan.

The rate hike comes at a critical time. Low mortgage rates have helped fuel a housing recovery that has kept the economy growing modestly despite higher taxes and steep federal spending cuts.

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