According to the Mortgage Banker’s Association of America’s weekly survey interest rates on 30 year fixed rate mortgages went up to 5.01%, up 6 basis points from the previous week. Mortgage rates are expected to rise further when the Federal Reserve stops buying mortgage backed securities at the end of March. Total Mortgage Service’s current mortgage rates remain well below the national average.
The MBA’s report also showed that mortgage applications increased in the week ending March 5th, despite the increase in mortgage rates. The seasonally-adjusted index of mortgage applications increased .5% last week. This is a promising portent going into the spring selling season. Sales during the spring are expected to set the tone for the housing market for the rest of 2010. Despite this promising sign, the real estate market still faces a difficult job market, a record number of foreclosures, and the end of government support for the housing market.
There are differing opinions on the strength and future of the housing recovery. In a recent interview with the Financial Times, Mort Zuckerman was bearish on the housing market, saying the crisis “has not gone away” and is “getting more severe”. He noted that the shadow inventory of empty and foreclosed or delinquent homes will depress home prices.
On the other side of the debate, Warren Buffett was optimistic about the prospects for the housing market, saying in his annual statement to Berkshire Hathaway shareholders that “within a year or so residential housing problems should largely be behind us, the exceptions being only high value houses and those in certain localities where overbuilding was particularly egregious”. Buffet noted that prices will remain below peak levels, but that will be beneficial to families that could not previously afford homes. Buffett also says that excess housing supply will be absorbed because the number of housing starts is far below the rate of household formations.
Whether you agree with Buffett or Zuckerman, it is likely that interest rates are going to rise soon. Rates are already almost a half point above their historical low in March 2009. If you are considering purchasing or refinancing a home, call Total Mortgage Services today to learn how we can save you money today.
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March 11, 2010 @ 3:19 am
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