Up from 4.32%, the average rate for 30-year fixed mortgages reached 4.4% this week. The steady increase means that the costs of borrowers, logically, are going up. Home prices also increased with 13.2% from January 2013 to January 2014.
With higher home prices and increasing mortgage rates, new house purchases are dropping. In February, they reached a five-month low. Purchases of already owned homes also fell to an eight-month low. The difficult winter conditions across the country were a strong factor in the slowdown as well.
As the Federal Reserve is changing the rules of the game by removing the stimuli that kept the borrowing costs down, the mortgage rates are bound to keep going up. The monthly bond purchases are down to $55 billion, from $85 billion last year.