The state of the US economy has inflation written all over it. Oil prices have dropped a little and then surge back upward, the Fed wants to throw money at the Hurricane ravaged Gulf coast, and prices for building supplies are skyrocketing. Reacting to inflationary prices, mortgage rates crept upward again this week. The 30 year, fixed interest-rate mortgage jumped 10 basis points to 6.07 % according to a survey of national lenders this week. Basis points are equal to one hundredth of 1 percentage point. Mortgage interest rates have not been this high since last spring. At that time the 30 year fixed interest rate was 6.13 %. The 15 year fixed interest rate mortgage jumped 9 basis points to 5.67%. The 5/1 adjustable interest rate mortgage rose 10 basis points to 5.69%. This may only be a temporary rake hike; although, the way the economy has been sliding we might have to get used to interest rates over 6 percent.
Many lenders are considering changing their loan limits and the criteria they use to approve loans. Most homeowners do not need $400,000 loan. The average home price was $218,000 last July, according to survey of national realtors. This represents a 14 percent increase over the prices the year before.
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