Mortgage Rates Jump In June to 5.29%

Posted on | June 4, 2009 | 4 Comments

For the last six months I have harped on mortgage rates being down in both my mortgage rate predictions column as well as my mortgage rates forecast. This week, we saw a huge jump in mortgage rates from 4.91% to 5.29% according to the Freddie Mac weekly survey. This is the highest level mortgage rates have been at in the year 2009. We have to go all the way back to December 11th, 2008 to see mortgage rates at this level.

Overall, mortgage rates are still well below where they were a year ago, 6.09%, but a jump like this has been very disturbing to the American public. As I pointed out earlier this week, there has been a surge in google searches related to mortgage rate predictions, weekly mortgage rates, mortgage rates going up or anything the like. The sentiment for the last six months has been that mortgage rates are going to continue to go down because the overall long term trend is down.

That was all fine and dandy until free markets finally started to work. The government had created artificial mortgage rates for quite some time as they were buying back mortgage backed securities and utilizing the Making Home Affordable plan to help home owners refinance as well as get low mortgage rates for first time home buyers. With all of these factors being the case, even with low mortgage rates, home prices continued to fall.

This leads me to a very disturbing point. If home prices continued to fall even when mortgage rates were under 4.8% what is going to happen if mortgage rates work their way back up to 6%? Well, honestly, the same thing that has been happening since June of 2006; home prices are going to continue to slide. There are several markets in the United States that have remained strong through this economic downturn but that is likely to change if mortgage rates continue to jump.

Another unforunate factor with mortgage rates moving higher is that many home owners have not gotten a chance to refinance. Not that rates are back above 5% I will be willing to say that many home owners who were debating getting a refi will no longer even consider it a possibility because the costs are going to outweigh the savings now that rates have moved up. Even if there will be some savings by refinancing, some homeowners do not want to go through the process especially if their home value has fallen.

Overall this is a very tough week for the housing market. You may here analysts on CNBC or FoxBusiness saying that higher mortgage rates did not hurt the housing market but use common sense. If extremely low mortgage rates did not help home prices, it is obvious that higher rates will not be of any assistance.

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4 Responses to “Mortgage Rates Jump In June to 5.29%”

» Subprime Blogger / Mortgage Rates Jump In June to 5.29% » Subprime Mortgage Refinance
June 4th, 2009 @ 10:53 am

[...] news by admin « Inflation, deflation, subprime mortgage crisis, & banks | Eneta … Holman [...]
Mortgage online » Blog Archive » Subprime Blogger / Mortgage Rates Jump In June to 5.29%
June 4th, 2009 @ 11:10 am

[...] post: Subprime Blogger / Mortgage Rates Jump In June to 5.29% This entry was posted on Thursday, June 4th, 2009 at 11:10 am and is filed under [...]
Subprime Blogger / Mortgage Rate Trends - Has the Trend Turned Up?
June 16th, 2009 @ 6:32 pm

[...] that mortgage rates are not in complete bull mode is the fact that the government has created artificial mortgage rates by buying up mortgage backed securities. I have stated many times over that this would come back [...]
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July 2nd, 2009 @ 3:50 pm

[...] that mortgage rates are not in complete bull mode is the fact that the government has created artificial mortgage rates by buying up mortgage backed securities. I have stated many times over that this would come back [...]

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