Higher Mortgage Rates?

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Higher Mortgage Rates In 2013?

The news that renters and home buyers do not want to hear is that 2013 will almost certainly see higher housing costs, higher rents and various mortgage fees.

This year also sees the introduction of several new mortgage regulations, and anyone applying for a mortgage will potentially be affected by these.

English: Sign of the times - Foreclosure

English: Sign of the times – Foreclosure (Photo credit: Wikipedia)

If you apply for a FHA mortgage and have a lower down payment, you will have higher rates for your mortgage insurance.

In an ongoing effort to add to its reserves, the FHA (Federal Housing Administration) has implemented various raises to insurance premium costs since 2008, and analysts seem to think that trend will continue. One such increase will be a 0.1 percent increase in the yearly insurance premium that is added to the monthly mortgage payment of borrowers. Currently, the charge for FHA borrowers is about 1.25 percent.

Janneke Ratcliffe of UNC Chapel Hill in North Carolina points out that once rates rise, this seemingly small increase will be noticeable.

Rental prices are rising due to a poor job market, a high number of foreclosures and tight mortgage lending, and in addition, the supply of rentals is low in many areas. Real estate firm Reis pointed out that in the 4th quarter of 2012, apartment vacancies stood at 4.5 percent, an 11 year low.

Whereas earlier refinancing options have not worked effectively, President Obama is likely to push for more effective legislation to help owners with an ‘underwater’ property, predict some analysts, including Julia Gordon of the Center for American Progress.

Consumers could be affected for better or worse when a series of new mortgage regulations are introduced early this year. One of the most important is a rule stipulating that a borrower must prove to a lender that they are financially able to pay back the loan.

Mortgage rates usually go up when investors move from Treasury bonds and mortgages to stocks, and this week was no exception. A 30 year fixed mortgage increased to 3.77 percent, while a 15 year fixed increased to 3.03 percent and a 5/1 adjustable rate mortgage increased to 2.78 percent.


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