US mortgage rates, still historically low, are sustaining progress in the housing market and giving the US economy a needed boost. But when rates rise – or Fed policy shifts – home prices can take a hit.
First the good news: Mortgage interest rates ticked downward for a second straight week. But it’s still been a volatile ride in recent months, and the general direction of interest rates for home loans has been up.
What does that mean?
If you’re a home buyer, that means the money you’ve budgeted for housing doesn’t go as far, in terms of the price you can offer to pay.
If you’re a home seller or home owner, a spike in interest rates can sometimes stall or even reverse the trend of rising home values. But the damage of rising interest rates doesn’t appear to be as bad as you might expect. History tells the tale, as we’ll see in a moment.
As of Thursday, the latest average interest on a 30-year fixed-rate loan is 4.31 percent a year, according to the firm Freddie Mac. That’s down from 4.51 percent two weeks ago.
Still, current US mortgage rates are also up a full percentage point from where they stood back in January. So the fact that their upward race has stalled, for a couple of weeks at least, is welcome news for the housing market.
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