signing real estate contractUsually, high mortgage rates are a bad thing. This is conventional wisdom. After all, if you’re looking to buy a house, you’re looking for low mortgage rates to lower your costs. Pretty straightforward, pretty simple. However, mortgage rates can also reflect the overall health of the economy.
If nobody’s buying, then the price of that item tends to get lower. The same goes with mortgage loans. If everybody can’t get a job, mortgage rates tend to drift lower. Now that the US economy has finally found its legs and is improving, unemployment numbers are going down. While there’s still a loud debate regarding the accuracy of the American unemployment reports, the truth is that this is having a positive effect on mortgage rates.
Mortgage rates are now beginning to climb back up, thanks to renewed signs in the US economy. The thirty-year fixed-rate mortgage rate is averaging around 3.76%. This is up from the previous week’s 3.69%. The fifteen-year mortgage term of a fixed-rate loan is averaging at 3.05%, which is quite a change from the previous week’s rate of 2.99%. All told, this is a positive indicator that the economy is improving. However, it may have a negative effect for home buyers, because if this upward trend continues, less people might take out mortgages. The less people take out mortgages, the stronger the drag on the broader market. There has to be some sort of balance here. Unfortunately, the economy needs to solidify on a truly fundamental level across the board for sustainable balance to kick in.