In the last few weeks, mortgage rates have significantly increased and we have witnessed some of the biggest jumps in the last 26 years. Despite the rise in rates, real estate pros are sure that this will not make homebuyers back off and houses will continue to be sold at the same pace, maybe even faster.
Freddie Mac said that the average 30 year fixed mortgage rate was around 4% over the past few weeks. Now this value has risen to 4.5% which is the highest rate that has been recorded since July 2011. Also this is the largest weekly jump ever since April, 1987.
The mortgage rates faced a jump because Ben Bernanke, Federal Reserve chairman stated that the Fed might purchase a lesser number of bonds from now onward.
The chairman of Houston Association of Realtors, Danny Frank, said that even though mortgage rates have witnessed huge jumps, house sales are not going down anytime soon. Frank believes that mortgage rates may have accelerated in the last few weeks, but overall they are still low values. As such, there is no reason for house sales to decrease.
Frank also stated that anyone can easily avail a mortgage offer at 4.17% with a period of 30 years. Indeed, this value is more than what it was a while ago, but if history is viewed, then the rates are reasonable. It is only in 2013 that homebuyers have found mortgage plans at less than 4%. Frank also believes that if house sales have to be reduced, the rates would have to go up by at least 7% or 8%.
In terms of house sales, the last month has been the best ever. The prime reason behind this is definitely the dip which mortgage rates have been experiencing for quite some time and have caused a little mayhem in the real estate markets. But this is not the only reason. Houston is experiencing a massive job growth and many positions are being posted. Annually, almost hundred thousand jobs are being added which is forcing huge masses of people to relocate to Houston.
The only downside in the entire scenario is that supply may not be able to meet the high demand. There are just not enough houses for sale.