Three Weeks In A Row Mortgage Rates Rise

They have been at record lows, but few economists expected that to last. With the federal government running massive deficits, there's competition for money which drives up its price aka interest rates.

By historical standards, mortgage rates are still extremely low and that should be conducive to the housing market getting back on its feet.

As interest rates rise, mortgage applications and refinance applications should decrease, as should home prices and sales.

From the Washington Post:

The bond purchases from Fannie Mae, Freddie Mac and Ginnie Mae brought down yields on mortgage-backed securities and allowed lenders to reduce rates on new loans while still selling the securities backed by them at a profit. The plan helped drive mortgage rates to a record low of 4.78 percent twice in April.

The central bank's purchasing program is scheduled to end in the first quarter next year, the Federal Open Market Committee said in a statement Sept. 23.

Rising borrowing costs and uncertainty over whether Congress will extend a government tax credit for first-time home buyers may have contributed to a drop in mortgage applications last week. The Mortgage Bankers Association's index of applications to purchase a home or refinance fell 12 percent, and sales of new homes declined in September, the Commerce Department said Wednesday.