Mortgage rates hit highest level since September

Time to lock and load? The average rate for 30-year fixed-rate mortgages was 4.5 percent on Monday.

By MSN Real Estate partner Dec 3, 2013 10:50AM

© Comstock, Getty ImagesBy Diana Olick, CNBC


Flat screens and espresso makers? No, it turns out that consumers should have been buying mortgages on Cyber Monday. By the end of the day, the average rate on the commonly used 30-year-fixed mortgage was 4.5 percent, its highest point since mid-September, according to Mortgage News Daily. It was 3.36 percent a year ago.


"Investors are hesitant to move lower in rates ahead of the important data coming up throughout the week, and most importantly on Friday with the employment report," said Matthew Graham, chief operating officer of MND.


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Data on new-home sales are set to be released Wednesday, along with manufacturing and payroll data. Jobless claims are out Thursday, and then the big monthly nonfarm payrolls (NFP) report.

"It's been increasingly the case that we see these leadoffs, starting ahead of NFP, because investors don't want to get caught offsides after a fast NFP move," Graham said.


That's why those who are considering a refinance or a home purchase might want to lock in Tuesday, as rates come slightly off Monday's highs before a possible surge.

"I convinced my entire pipeline to lock today," said one mortgage originator on MBS Live, an online data platform and industry community.


It could all go the other way, of course, but not much. While 4.5 percent may not yet be a floor, it is increasingly clear that 4.25 percent is. These moves may seem small, but consumers need to pay attention.


Home prices were up 12.5 percent in October, according to the latest reading from CoreLogic. While the gains are beginning to slow, the sharp move up this year has rattled the housing recovery.

"We have come too far too fast," Zillow CEO Spencer Rascoff said on CNBC's "Squawkbox."

Consumers are now "dual tracking" on Zillow — comparing rents to purchase prices — but not paying nearly enough attention to mortgage rates, he said.

"Most American homebuyers are still so uneducated about the importance of mortgages that they obsess about whether a home is going to be $300,000 or $310,000, but whether they're paying 4 percent or 4.2 percent is lost on them," Rascoff said.


Despite rising rates, several mortgage products are available, and you may be able to reduce your monthly payment a bit if you have clean credit and a solid down payment. In today's market, of course, those are big ifs. While housing price gains had been viewed as a sign of recovery, most are now saying that a slowdown going into 2014 is a good thing.


"The slowdown in price appreciation is positive for the housing market as almost half the states are now within 10 percent of their respective historical price peaks," said Mark Fleming, chief economist at CoreLogic.


Taking a collective breath will help some during the slow winter season, but buyers should beware that spring could bring not just higher prices but higher mortgage rates. The days of the 3 percent 30-year fixed are clearly over.


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Tags: loans
Dec 4, 2013 6:55AM
I just finished my refi a week ago....didn't necessarily lower principal or interrest but I did eliminate the PMI from my FHA loan 2 years ago taking advantage of the rising value of my home (appraised for 65k higher than what I paid) taking 13 percent off my total payment.  And I wasn't stupid enough to "cash out" that equity.  I'm quite happy right now, since PMI is the biggest legal theft on the planet.  Why do lenders need insurance?  I thought repossessing my house was their insurance for my "secured" loan.
Dec 3, 2013 5:08PM
The economy better???? Where??  Big employer in my area just announced a big lay-off. They want to be globally completive>>> that's means more jobs for China or some other third world country.
Dec 3, 2013 2:51PM
Depends on location still although most areas are much slower now due to 1) winter; 2) buyers are tapped out; 3) stagnant wages and little job growth; and 4) houses still overpriced in many areas.
Dec 3, 2013 12:39PM
When you are at the bottom there is only one way to go.
Dec 3, 2013 11:59AM
TGIF - "Thank God Its Fixed" -  the mortgage rate, that is.  I bet that is what people are saying who have a lower rate locked in for the duration.  Those with ARMs and looking to mortgage a new home are going to get squeezed - again!!! 
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