Long Term Interest Rates Increase
Freddie Mac released their weekly Primary Market Mortgage Survey yesterday, showing 30-year rates at their highest point since July of 2004. A 30 year fixed rate mortgage averaged 6.10%.
In spite of the rate increases, Freddie Mac’s Vice President was optimistic about the state of the market overall.
“Despite the gradual rise in mortgage rates over the last two months, housing starts were actually up in September highlighting the resiliency of the housing market,” said Frank Nothaft, Freddie Mac vice president and chief economist. “As a matter of fact, housing directly contributed to real GDP growth of 19 percent in the first quarter of the year and 23 percent in the second quarter. To put this in perspective, this would compare to 17 percent of real GDP growth over all of 2004.
Not surprisingly, housing starts are considered a “leading economic indicator”. An increase in housing starts is said to reflect a healthy real estate market several months in the future.
We’ll be writing some more soon about what we think one should make of the current market and what mistakes both buyers and sellers should avoid as the market changes.
