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How Will Chicago Homes Be Affected By Increased Mortgage Rates?

Date : May 28, 2013

Chicago homes and interest ratesEven though mortgage rates are slowly creeping higher, they shouldn’t affect the sale of Chicago homes. According to Freddie Mac reports, rates are still low enough to allow high home-affordability. In fact, Chicago home sales continue to rise and plenty of new construction is being completed, in an effort to keep up with the prospective home buyers demand.

The Primary Mortgage Market Survey® (PMMS®) average 30-year fixed-rate mortgage (FRM) was reported at 3.81 % (0.8 point) on May 30th, slightly above last year’s rate. The current average 15-year FRM came in at 2.98% (0.7 point), versus the reported 2012 rate of 3.04%.

Rate increases have been gradual and are not expected to affect sales of Chicago homes at this point, however if you’ve been deliberating over whether or not your should sell you home, it may be a good time to call and ask us for advice.

Frank Nothaft, vice president and chief economist, at Freddie Mac, responded to the higher rates, saying,”While this may slow some of the refinance momentum, rates are nonetheless low and home-buyer affordability high, which should further aid home sales and construction in coming weeks. For instance, in April, single family housing permits rose to the strongest pace since May 2008 while existing home sales for the same month grew the most since November 2009. Moreover, the National Association of Realtors® reported that the median number of days on the market for these sales fell from 62 to 46 days, the fewest since it began collecting the data in May 2011.”

Little change was seen in the 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM), shown at 2.66% (.5 point) for May 23, 2013 as compared to 2.83% for the end of May last year, and the 1-year Treasury-indexed ARM is currently averaging 2.54% (0.4 point), while last year it came in at 2.75%.

To read more about the housing market and review current and historic rates, please click here.

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