Mortgage Rates Inch Up as Housing Prices Fall

After 11 weeks of consistent interest rates drop mortgage rates are back up over 5%.

According to the Mortgage Bankers Association in the week ending with January 15th, the average interest rate on a 30-year fixed rate mortgage increased to 5.24 percent with 1.16 points, compared with 4.89 percent at the cost of 1.2 points for the previous week. Interest rates have been pushed up due to the trouble the new $875 billion stimulus package has been having in congress. Most lenders that had already priced this into their rates are pulling back to see what happens with the bill.

Falling home values have been making it hard for borrowers to refinance their homes to take advantage of these lowered rates. With today’s current lending guidelines borrowers needed this extra equity in their home to qualify. Other guideline changes have also made it harder for borrowers to get qualified, with lenders saying about half of their mortgage applications are getting approved.

According to the Federal Housing Finance Agency, home prices fell 1.5 percent in the Midwest & 1.8 percent nationally when compared to the previous month for the month of November. During the 12 months ending with November home prices were down 6.4% for the Midwest. New construction numbers have also been suffering dramatically due to the declines in values.

To read more about no signs of life in the housing industry head on over to the Chicago Tribune.