Interest rates broke 5% for the first time in almost a year, a far cry from November when the lowest recorded rates in 40yrs were recorded. Freddie Mac reported Thursday that interest rates closed at 5.05% for the week.
Rising interest rates are an indication of a strengthening economy, as well as a drop in jobless benefits claims and a falling unemployment rate over the last two months.
Even with these hints of a recovering economy the housing market is slow to follow. The Associated Press reports that “record foreclosures have forced home prices down,” yet “last year was the worst for sales in more than a decade.”
5.5% may seem high compared to the low 4%’s that have been available in the last year, but 5.5% is still extremely low comparatively. Rates weren’t consistently lower than 10% until 1991 and rates are still lower than they were at the peak of the housing market when rates were consistently around 6.76%.
The rise in interest rates will most likely effect borrowers looking to refinance rather than purchase.