Housing Takes Another Hit as 30-Year Mortgage Rates Climb Above 5%

by Douglas McIntyre Feb 11th 2011 6:30AM
Updated Feb 11th 2011 6:35AM
Mortgage rates on 30-year fixed loans moved above 5% this week, according to a Freddie Mac report, up from 4.81% last week, reaching the highest level since April 2010. The home market is already up against a number of challenges -- and now mortgage rates may be among them.

Research firm RealtyTrac recently reported that foreclosures remain stubbornly high. Standard & Poor's has forecast home prices could drop another 7% to 10% this this year. If that is so, the value of homes in many areas will have dropped over 50% from the 2006 peak. Hard hit states like Nevada may have experienced drops closer to 70% over the same period.

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Home mortgage rates are still near historic lows, so buyers may decide to purchase houses before interest rates get much higher. But many people in the market will assume rates will drop again and make housing more affordable. The slight upward tick in inflation will make that scenario less likely.

The federal government still has not come up with a nationwide solution to the housing problem. The Home Affordable Modification Program (HAMP) has been a failure. The only plan that was a success, the home buyer tax credit, expired last April. Without a new tax credit from the Obama Administration and Congress, higher mortgage rates will be the straw that broke the camel's back.

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9 Comments

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shorthosep

most of the loans were given out courtesy of Freddie and Fannie. Those are Democrat love-children. Face it, the Republicans suck but the Democrats are simply sinister

Sorry but the facts are for every bad loan backed by Fannie and Freddie wall street had 4 bad loans. Where did you get your facts ----- FOX News!!!! That's not a news organization that a GOP front

February 13 2011 at 3:28 AM Report abuse rate up rate down Reply
KKiegiel

The housing market was to stay in the doldrums for the next 5-10 years to work out the mega mess. Now the government will buy back these homes and let them rot away or get rid of them cheap, then make up some public housing projects for all the ones out of work. People are holding onto whatever job they have already even if it means losing insurance benefits, which is never a factor in any employment numbers. Mega millions of homes in foreclosure already and will get worse that rates are heading back up. Banks need to make money and the only way to do that with the slow market is to raise rates.

February 12 2011 at 5:31 PM Report abuse rate up rate down Reply
havecash

That is what I don't understand about the mortgage industry.

They have no business so they jack up the rates for people who can't qualify for loans because of poor credit; a house that doesn't appraise; or, they don't have much of a downpayment.

The housing industry will stay in the doldrums for another 5 years....the mortgage industry officials deserve to lose everything for what they've done and continue to do!

Shame on them.

February 11 2011 at 9:56 PM Report abuse +2 rate up rate down Reply
My Name

So this is what Americans are made of? Walk away from your obligations because you don't like them. Shame on anyone who can pay their mortgage but decides to walk away because they are underwater. I hope you never get a chance to get into your own home again. Move in with your parents (if you know who they are).

February 11 2011 at 7:59 PM Report abuse -1 rate up rate down Reply
Christine

Homeowners need to keep walking away from their homes. There is no shame in it. Break these banks once and for all! Let all their Golden parachutes turn into feces and make them pay the price for the speculation, underhanded lending practices and fraud which elevated prices and created this fiasco. Then we need to put Greenspan, Barney Frank and Chris Dodd on trial.

February 11 2011 at 5:10 PM Report abuse rate up rate down Reply
hustonlaw

Here's the plan: The Administration, along with Congressional Representatives, the Treasury, the FED, the largest mortgage lenders, and homeowner representatives from States like Nevada that have programs aimed at staunching the flood of foreclosures, meet and determine to enter into a TEMPORARY loan modification program that features the reduction of principal balances to about one-quarter to one-third ABOVE current market values for all real property, with mortgage interest rates floating at current rates, not to exceed x%, not merely for distressed real property, and base mortgage payments over the next, say, five years, set at those levels. If the real propety is sold during that temporary period, the homeowner aznd lender will equally share any equity value or loss. With the market value increased, the effect on the market should be to stabilize it. Also, this type of scheme would recognize the reality that all of our homes are under water, not just the ones where borrowers are failing.

February 11 2011 at 2:36 PM Report abuse +1 rate up rate down Reply
cferrin104

WE OVERBUILT - I DO NOT UNDERSTAND WHY THAT IS SO HARD TO UNDERSTAND

February 11 2011 at 12:50 PM Report abuse +1 rate up rate down Reply
Frank

With unemployment so high and many others surviving on part time/temp work I don't see housing recovering anytime soon. Couple that with 27% of homeowners underwater and the market becomes frozen. Many sales today are cash deals with refinancing done on the back. Alot of foriegn money buying the country.

February 11 2011 at 9:09 AM Report abuse +5 rate up rate down Reply
daveswrath0704

Its all a game EVERY time they report that thing are getting better Bank and there trap money push rate up so people who work for a living cant get a head of the game just like gas keep going up its all about control and greed !!!!!!!!!!!

February 11 2011 at 8:35 AM Report abuse +5 rate up rate down Reply