WASHINGTON (AP) — With mortgage rates posting a big increase this week, more home buyers may decide to make the move sooner rather than later.
Mortgage buyer Freddie Mac said today that the average on a 30-year loan has jumped about a half-percentage-point to nearly 4.5 percent. It's the highest rate since July of 2011, and the biggest increase since April of 1987.
One real estate broker and owner in Cleveland is already seeing more activity in his market. Anthony Geraci says, "People are getting off the fence a little bit more." But he adds, "If there's enough supply, people might sit and wait a little bit and see if the rates come down."
Not Alex Backus. The rising rates motivated him to act two weeks ago and sign a contract on a three-bedroom house in the Seattle suburb of Edmonds. He locked in a 30-year loan at 4.125 percent. Backus says with rates starting to rise, "it seemed like now was the time to really get serious about buying a home."
The increase in mortgage rates can mean a huge difference in the cost of a home over the life of a mortgage. A buyer who locked in a rate of 3.35 percent in early May on a $200,000 mortgage would pay $881 a month, according to Bankrate.com. Another buyer who this week gets a 4.46 percent rate would pay $1,008 a month. The difference: $127 a month, or $45,720 over the life of the loan.
APPHOTO NYBZ113: A home is for sale in Glenview, Ill., on Sunday, June 16, 2013. Average U.S. rates on fixed mortgages surged the week of June 24, 2013, to their highest levels in two years, and the rate on the 30-year loan jumped by the most in 26 years. The increase is evidence that the Federal Reserve's comments about possibly reducing its bond purchases are already affecting consumers. (AP Photo/Nam Y. Huh) (16 Jun 2013)
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