Interest rates for home mortgages starting to climb back up
HOUSTON (KTRK) -- It's no secret Houston's real estate market is booming right now. There are even bidding wars on some homes. But is all that about to change?
Since April, mortgage rates have jumped almost 1 percent, causing concern for those in the market to buy a home.
"We've seen people that were shopping two months ago, that they're qualified for less house now," said Marc Elliott with Core Lending.
Elliott says if you qualified for a loan back in March or April, and are still looking for a house to buy, you're going to have to make some changes.
"Maybe they're going to look for a little cheaper home. Maybe they're going to look to adjust their budgets," Elliott said.
So why the rate increase?
"The Federal Reserve was buying mortgage back securities to keep rates low. And as the economy is starting to recover, they've decided to not do that anymore," Elliott said.
Elliott tells us rates that were around 3.5 percent last month have jumped to nearly 4.5 and will continue to rise.
"Down the road, we're going to see more increases. That it's going to hit 5 and then possibly beyond, to get back to where rates were several years ago," Elliott said.
"Last week was the single biggest increase in a rate, in a one-week period in the last 10 years, so that's going to have a dramatic effect," Houston Association of Realtors Chair Danny Frank said.
Frank says he believes the rate increase might actually boost home sales.
"I think it's going to push the people to make a decision to buy a home right now. That's why I think it will make the market even stronger than it is today," Frank said. "Now's a great time to buy a house. It's even a better time to sell a house."
However, not so good news if you're looking to refinance.
"We found that people that were able to refinance, or made sense to refinance a month ago, now it really just doesn't anymore," Elliott said.
Right now the 30-year conventional rates are at 4.5 percent right now. Fifteen years are at 3.75 and FHA 30-year rates are 4 percent.
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