Mortgage Loan Rates To Top 8% For US Home Buyers
Mortgage Loan Rates To Top 8% For US Home Buyers
U.S. homeowners observe mortgage loan rates have the potential to rise above 8% in the next year, they are not worried that higher rates and a slowing housing market will hurt the value of their homes according to a recent survey.
Half had fixed-rate mortgages, and 14% had adjustable rate mortgage loans or other kinds of home loans. Among those surveyed, 71% expect mortgage rates to rise in the next year, 21% expect little change, and 3% expect a decline. Mortgage financier Freddie Mac reported that the average rate on 30-year fixed mortgages was 6.67% in the week ending Thursday, up from 5.62% a year earlier.
The average rate on one year ARMs was 5.68%, up from 4.26%. ARMs have recently accounted for about 30% of mortgage applications.
Rates have risen as the Federal Reserve has increased its benchmark short-term lending rate. Sixteen straight increases since June 2004 has pushed the key rate up to 5%.
Homeowners with fixed-rate mortgages may have less reason to worry about rising rates, especially if, like most of those in the ING survey, they don’t plan to move soon.
Those surveyed say they expect their homes to rise 3.8% in value in the next year, ranging from 2.5% in New England to 4.7% in south Atlantic states. ING Direct is a unit of Holland’s ING Group NV.