Consumers who think that historically low mortgage rates around the 4 percent mark are the norm, need to adjust their thinking, stat. Slowly but surely home loan interest rates have moved upwards towards the 5 percent mark. While this is still a healthy rate, it is certainly more costly than the 4.2 percent offerings on traditional 30-year fixed mortgage rates recorded by mortgage rate origination tool Mortgage Marvel, on October 12, 2010. While many bargain seekers may think that this rise is laying out the future path of doom and gloom within the industry, insiders believe that increasing mortgage rates are a good thing that may indeed stimulate the housing market.
Predictions of the demise of low mortgage rates were made in late 2010. At that time the Mortgage Bankers Association (MBA) stated that consumers should expect rates to inch towards the 5 percent mark with an increase to around 4.7 during the first portion of 2011. So far that divination looks on target as Mortgage Marvel tracked 5 percent offerings on the first day of 2011 courtesy of their mortgage rates trend tool.
A Brief History of Mortgage Rates
There is no doubt that 2010 will go down in history for providing the lowest mortgage rates ever. Government assisted mortgage lender Freddie Mac only started keeping track of mortgage rates activity since 1971. The 4 percent rates for 30-year fixed rate mortgages provides a stark contradiction to the 18.45 percent rate (requiring 2.3 points) that occurred nearly thirty years earlier in October of 1981. While experts do not predict such high rates for future loans, increases are indeed looming on the horizon.
The activity of the Federal Reserve Board coaxed the current mortgage offerings. In order to help stimulate a faltering economy, the Feds previously slashed the federal fund rate they charge to loan money. That resulted in lower interest rates across the board and the lowest historic mortgage rates for consumers ever offered. In response, qualified consumers actively participated in the mortgage industry (both in the form of first time loans and refinancing opportunities) and that hustle is primarily responsible for the predicted increases.
How Rising Rates Could Stimulate Housing Activity
While the Feds are dedicated to keeping interest rates low, the slight increases may actually be a good thing for the mortgage industry, as mortgage seekers may start to realize that the party is almost over. Regardless of the consumer product in question, price increases have the psychological effect of creating a sense of urgency in shoppers. That is especially true in the housing market as small rate increases can pack a powerful punch of reducing buying power for home shoppers.
According to Greg McBride, chief economist for Bankrate.com, "...When rates rise from 4.25% to 5% it takes away about 9% of buying power", in the home purchasing process (Money.CNN.com). For money conscious consumers, that amount can represent the difference between buying a single-family detached starter home versus a more affordable condominium.
Where to Find the Best Mortgage Rates Available
Wise consumers poised to take advantage of the low mortgages before they completely disappear from the landscape have plenty of tools that can make the process easier to manage. However, throughout the industry over 950 lenders rely on Mortgage Marvel to provide accurate mortgage rates and consumers now have direct access to the source as well.
Powered by dynamic Mortgagebot L.L.C. technology, mortgage rate origination tool Mortgage Marvel provides consumers with accurate and up-to-date mortgage rates any time. After conducting a simple search, mortgage rate information will be presented in an easy-to-follow comparison table. Plus no personal information is required for the initial mortgage quote. Mortgage seekers can immediately complete an online mortgage application and can expect to receive approval and complete (with full disclosure information) in as little as 20 minutes.
