Mortgage Rates Update, 1/17/13

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Mortgage rates finally realized the spike that so many had been waiting for through December and the beginning of January, moving upward Thursday to place the 30-year fixed rate at 3.5 percent, a significant move from the 3.375 percent pattern it had been stuck at for so long. For those who didn’t lock in a rate, borrowing for a home just got a bit more expensive. Those who were expecting a few more weeks to comfortably refinance were also caught off guard as well by the increase. What surprised many experienced market watchers was just how fast the rate popped in one day of open trading, almost as if a steam kettle suddenly burst over flame.

The change in value was contributed to a couple bits of news and activity around the world. First, U.S. economic data reports came in better than expected, confirming steady growth. Second, housing starts also sustained an increase, marking an improvement in the housing market that everyone accepted as genuine and real. Third, stock prices and interest rates in general began to rise in response to news one and two, driving up mortgage rate as well.

There’s a lot of debate going on Thursday evening as a result of the day’s activities concerning what value a lock has at this point. From one perspective, the rates have moved but they aren’t anywhere near the high point of January over all. So there’s still room to say the rates could fall back as they have in the past. The opposite perspective says the spring is coming with better times where the economy generally tends to improve. A lock now protect from a rise closer to 4 percent by the summer.

Lenders are looking at the mortgage market movement as a clear sign of instability for a while, expecting a potential roller-coaster of ups and downs before a new trend and floor is established. On the one hand, the major banks are expecting a retrenchment in the general market and economy. That in turn would drive mortgage rates down. On the other hand, housing starts are rising, which means demand is growing for property and borrowing needs will be increasing.

Thursday’s market close left the rest of the rate averages up as well. Along with the 30-year mortgage average at 3.5 percent, the 15-year counterpart settled at 2.75 percent to 2.875 percent. The five-year adjustable mortgage resolved between 2.625 percent and 3.25 percent.

About John Krystof

John Krystof writes about personal finance and money matters for He was born and educated in Central Europe, but presently resides in New York City.

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