Mortgage Rates Rise as Buyers Jump

By Mike Colpitts

Mortgage rates rose to the highest level since last May as home buyers jumped back into the market, according to Freddie Mac. The rate on a 30-year fixed rate mortgage rose to 4.86%, a .05 move up for the week.

The National Association of Realtors pending home index rose 3.5% in November to 92.2 based on purchase contracts signed during the month from 89.1 in October. The improvement marks a 5% decline from one year ago when the federal tax credit for home buyers was available. However, the index shows a sharp improvement for the month, representing contracts and not closings, which usually take a month or two to close.

Happy New Year

Home sales are showing an improvement since a downturn following the expiration of the federal home buyer tax credit with sales of new and existing homes up 5.5% in October and 5.6% higher in November, according to NAR figures.

Rates on a 15-year fixed rate loan also increased by the same margin for the week with 0.8 point. A year ago the same mortgage was 4.54%.

Interest rates on a 5-year Hybrid adjustable rate mortgage also rose slightly over the holiday week, but were still below the year’s highs set in the first half of the year.

The 30-year fixed mortgage averaged just below 4.7% for 2010, which represents the lowest annual average since 1955 when secondary market yields on FHA mortgages were above 4.6% and the average price of a home was $22,000.

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