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Higher Mortgage Rates and Home Prices to Curb Price Appreciation in 2014

Higher mortgage rates and home prices are expected to slow down the price appreciation of homes next year. This isn't a surprise since the double-digit price increases of the past year are just not sustainable. Other factors that will keep a lid on home price increases for the next several years are a high unemployment rate and slow wage gains.

CoreLogic, the real estate data firm, released a report showing home prices increased 10.2 percent in the first quarter of 2013. This is the first double-digit price increase since the height of the housing bubble back in 2006. The largest price increases were in Phoenix, Arizona at 23 percent. Home prices were up 21 percent in Sacramento, California, and surprisingly, up 18 percent in Detroit, Michigan.

Best Markets for Home Price Gains

The hardest hit markets during the housing bust are having the best price gains right now. Future price increases in these markets will probably be lower than the average increase in the coming years. Gains above 10 percent are not sustainable in the long run so gains of over 20 percent are highly unlikely.

The sharp increase in mortgage rates has subsided for now and rates will probably remain at current levels. Mortgage rates today on 30 year conforming loans are averaging 4.38 percent, a slight increase from last week's average 30 year mortgage rate of 4.35 percent. This week average 30 year mortgage rates will remain between 4.45 percent on the high end and 4.25 percent on the low end.

Higher Mortgage Rates and Home Prices to Curb Price Apprication in 2014Best Refinance Rates Today

The best refinance rates today for 30 year conforming loans at are well below the average rate. The lowest refinance rate with 2 mortgage points in our database is at 3.875 percent from several different lenders. The lowest 30 year refinancing rate without points is at 4.25 percent.

Current mortgage rates on 15 year conventional loans are averaging 3.43 percent, no change from last week's average 15 year rate. Average 15 year rates will remain between 3.50 percent and 3.30 percent this week. The lowest 15 year quotes right now in our database with 1.50 points are at 2.875 percent. The lowest rates being offered without points right now are around 3.125 percent.

Today's Mortgage Rates on Jumbo Loans

Today's mortgage rates on 30 year jumbo loans are averaging 4.70 percent, up from last week's average 30 year jumbo rates of 4.69 percent. Jumbo mortgage rates on 30 year loans will remain between 4.75 percent and 4.60 percent this week. Right now the lowest 30 year jumbo refinance rates in our database are at 4.00 percent with 2 points and at 4.375 percent with no points.

Average 15 year jumbo rates today are at 4.03 percent, a slight increase from last week's average 15 year jumbo rate of 4.01 percent. 15 year jumbo rates this week will remain between 4.00 percent and 4.10 percent. Currently, the best 15 year jumbo mortgage interest rates in our database are at 3.25 percent with 1.625 points and at 3.75 percent with zero points.

Adjustable Mortgage Rates

5 year conforming adjustable mortgage rates are averaging 3.41 percent, up from last week's average 5 year adjustable rate of 3.40 percent. This coming week 5 year adjustable rates will remain near current levels. Currently, the lowest 5 year adjustable refinance rates are at 2.375 percent with 1.375 points and at 2.60 percent with no points.

Jumbo adjustable mortgage rates on 5 year loans are averaging 3.16 percent, a decline from last week's average jumbo adjustable rate of 3.20 percent. This coming week, 5 year jumbo rates will remain between 3.10 percent and 3.20 percent. The best jumbo refinance rates on 5 year loans are currently at 2.50 percent with 2 points and at 2.875 percent with zero points.
Author: Brian McKay
August 6th, 2013