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Mortgage Rates Approach Four-Year High


Mortgage interest rates were are moving up, though not to the point where they are expected to dampen the demand for home ownership or curtail the strength of the U.S. housing market.

The rate on a 30-year fixed mortgage climbed to 4.5% at the end of January, close to a four-year high, according to Capital Economics.

ON-CK652_HouseF_D_20180209154037.jpg Getty Images/iStockphoto

This comes as the yield on the 10-year U.S. Treasury has risen as well. On Friday it was at 2.83%, up from 2.50% a month ago, as investors have begun to discount stronger growth and higher inflation.

Mortgage rates have climbed steadily as the economy has improved. The housing market remains strong, supported by tight inventory, good job growth and favorable credit conditions.

True, rates for 30-year fixed mortgages were below 4% in 2016.

But Susan Maklari, an analyst at Credit Suisse, points out that over the past 20 years, the average for a 30-year fixed mortgage is just under 6%.

Maklari doesn't expect that the higher rates will impede the housing market.

Consider that the monthly payment for a $200,000 mortgage at 4.0% is $955. At 4.5%, it's about $55 a month higher - probably not enough to break the bank.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Investing



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