HOUSING: Cost of mortgage rising
Average interest rates leap by almost half a point
By ZACH FOX - Staff Writer | ∞
A mortgage will cost you more this week.
The average contract interest rate leaped by almost half a percentage point in one week, up to 6.59 percent for the week ending Friday, according to a report released Wednesday by the Mortgage Bankers Association.
Moreover, more rate hikes are anticipated.
"My estimates are it's going to be a real ugly Christmas," said Shawn Harris, a mortgage broker based in Encinitas. He said rates could get as high as 8 percent.
An average 30-year, fixed-rate mortgage for a San Diego County home carries an interest rate of about 6.7 percent, counting in brokerage fees, mortgage brokers said Wednesday. Larger loans, known as jumbo mortgages, carry even higher interest rates.
Rates are at the highest level in a year, according to the survey.
For a $400,000 loan, the one-week jump in interest rates translates to an increase of about $100 per month. And at more than 6.5 percent, interest rates are a full percentage point higher than a low of 5.49 percent in January, forcing an increase of almost $300 per month in costs for a $400,000 loan.
More expensive mortgages have forced some interested buyers to wait on purchasing their first homes, said Alex Ramirez, a broker with Trusted Mortgage Pro in Temecula.
"Right now, every dollar counts," he said. "For people who need to qualify for certain mortgages and need certain debt-to-income ratios, 50 bucks can put someone out of the game."
High inflation numbers reported by the Bureau of Labor Statistics have hurt mortgage rates, which rise along with increased inflation. With inflation robust, bond traders are wary of fixed-income investments such as bonds based on fixed-rate interest rates. When the bonds trade at lower prices, interest rates go up.
Higher costs have led to fewer mortgages closing, with an activity index down about 6 percent in one week and about 20 percent below the level a year ago, reported the bankers association.
Contact staff writer Zach Fox at (760) 740-5412 or zfox@nctimes.com.
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