Wednesday, January 24, 2007

After the real estate market surge, new rates arrive.

According to Freddie Mac, a leading mortgage agency, the interest rates have risen slightly, after the increased sales and mortgage activity in the first 2 weeks of January.

With home prices and fixed-rate mortgages at near-record lows, the real estate environment benefits home buyers. Refinancing activity has been on the rise as well, with consumers changing from adjustable to fixed rate mortgages and consolidating debt after the holidays. Now, the market reacts with the 30-year fixed-rate mortgages, 15-year mortgages and hybrid ARMs raising a fraction as compared to the previous week.

The increased home buying activity is in part due to high employment numbers and low prices. Contrary to expectations, purchasing activity started going down during the second week of 2007, after the rise in the beginning of January. Home prices are likely to rise soon, with the spring home buying season approaching and the market waking up after last year’s lows.

The rising trend for ARMs may continue in 2007, making fixed-rate mortgages even more attractive for borrowers and stimulating refinancing. However, some researchers predict cuts after last year’s consecutive hikes, so ARMs may yet offer surprises.

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