Rise in mortgage rates clouds economic recoveryby Tim Manni
From the front page of today’s Wall Street Journal:
Rising interest rates threaten to dim prospects for a housing recovery and choke off a refinance wave that was a major plank of the Obama administration’s economic-stimulus efforts.
On Wednesday, rates on 30-year fixed-rate mortgages climbed to 5.79%, up from 5% two weeks ago, according to HSH Associates. That jump will cut roughly in half the number of borrowers with an incentive to refinance, according to FTN Financial.
Refinance activity at J.P. Morgan Chase & Co. is already “really down” since rates began rising, a spokesman says. A rate of 4.75% “seemed to be the switch” that turned on refinance activity, he says. Now, rates are a full percentage point higher.
Will this short-circuit the refi and homebuying that has been fueled by historically-low rates? We’ll explore that in the upcoming HSH Market Trends newsletter.