Mortgage Rates are Now Increasing

For a 30-year fixed mortgage, the average U.S. rate increased this week following the decreasing to its record lows in the last four weeks.

According to mortgage buyer Freddie Mac last Thursday, the rate on the 30-year loan increased to 3.55 percent from 3.49 in the previous week.

For a 15-year fixed mortgage, which a common refinancing option, the average rate increased to 2.83 percent from 2.80 percent in the previous week.

Less expensive mortgage rates has aided in a moderate but irregular housing recovery this 2012. Sales of new and occupied homes in the past declined in the month of June from May but it was higher than the same period in the previous year. Moreover, home prices have begun to increase in most of the cities.

Meanwhile, low mortgage rates can aid the economy if the number of people who refinance increase. This is because people pay less interest and this increases their money for spending. An increase in spending helps in the growth of the economy.

Unfortunately, the speed of home sales is still under healthy levels due to the fact that a lot of people are having problems in becoming eligible for home loans or do not have a large amount of money for down payments asked by banks.

Also, the slow job market could hinder some people from purchasing homes this year. Based on the data from Labor Department, the unemployment rate increased for the month of July to 8.3 percent, despite the increase in jobs offered by employers, from 151,000 to 163,000 jobs.

Last Wednesday, the Federal Reserve said that the economy is becoming weak and promised again to take actions if the job market continues to weaken. The Fed also recognized the fact that economic activity weakened during the first six months of the year, unemployment increased, and consumer spending declined.

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