The LMC Group Blog

Mortgage rates went up this week, as economists declared that the recession is over.

The benchmark 30-year fixed-rate mortgage rose 10 basis points to 5.32 percent, according to the Bankrate.com national survey of large lenders. A basis point is one-hundredth of 1 percentage point. The mortgages in this week’s survey had an average total of 0.34 discount and origination points. One year ago, the mortgage index was an eye-popping 6.74 percent; four weeks ago, it was 5.38 percent.

This week, four in five economists surveyed by the National Association of Business Economics said that the recession has ended and the economy is in recovery. But they expect the economy to remain in the critical care unit for a long time, with a high unemployment rate lingering all next year.

Delivering his economic update at the MBA’s annual convention in San Diego this week, Jay Brinkmann, chief economist for the Mortgage Bankers Association, says he expects the unemployment rate to top out at around 10.2 percent in the second quarter of next year. From there, he expects it to decline slowly, finally dipping under 8 percent in the last three months of 2012.

Brinkman expects a modest decline in mortgage rates in the final three months of this year. Then comes the slow rise in rates. Brinkmann forecasts that the 30-year fixed will average 5.1 percent for all of this year. (In Bankrate’s weekly survey, the 30-year fixed has averaged 5.44 percent so far this year; the MBA uses a different methodology and its rate averages are usually about 0.3 percentage point lower than Bankrate’s.)

What does all this mean to me? It means that we have hit the bottom and it is expected by all economic forecasters that the future holds debt repayment from the bank bailouts, which means higher rates and inflation.

What to do?

If you have been sitting on the fence on re-financing, loan modification, buying a house; you had better get busy. Your time is running out if you want the most house for the money, the best rate for a re-finance, or a loan modification. 2010 welcomes a modest recovery from the recession and surely would be a welcome sign for all, however, new growth means no more giveaways and the end of low rates for many years to come. Time to pay the piper.

For further information on this and other topics that concern you, please feel free to comment and contact us.

The LMC Group