Mortgage rate surge could spur home-buying

Rare Staff Report | Posted on

Thinking of house-hunting this weekend? You might not be alone as home-buyers flock to the market hoping to lock in super-low interest rates, in case they keep surging as they have this week.

Thirty-year fixed mortgage rates reached their highest in two years, 4.46 percent, from a near-record low 3.31 percent last month as the 10-year Treasury rates have gone up on hints from the Federal Reserve that it’ll slow its economy-stimulating bond purchases that have kept rates down, The Associated Press reported, citing a report from mortgage buyer Freddie Mac.

The interest rate hikes come as home sales are recovering. In May, the AP reported, previously occupied home sales topped 5 million for the first time since December 2006, with higher sales figures expected for June.

Refinancings also are increasing as homeowners lock in 15-year interest rates, which jumped from 3.04 last week to 3.50 this week, the highest since August 2011, the AP reported.

If the Fed follows through on its pullback, then interest rates could go higher still, the AP reported.

When home-buying goes up, prices tend to go up, which could price some buyers out of the market, the AP reported.

Fed Chairman Ben Bernanke said last week that the Fed is likely cut its bond buying later this year and stop buying them next year, if the economic rebound continues, the AP reported.

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