Reuters Business Report - The race is on- as home buyers hit the gas pedal -
mortgage applications surging 5 percent last week- trying to lock in rates as they continue to climb.
The average 30 year mortgage rose to 4.15 percent- the highest since late March of 2012.
Even refinancings- which had been tapering off a bit- were up 5 percent.
But the rush may be premature- rates may stay in a new, slightly higher range saysSteven Ricchiuto, Chief US Economist, Mizuho Securities
STEVEN RICCHIUTO, CHIEF U.S. ECONOMIST, MIZUHO SECURITIES:
"We've put in a bottom in the interest rate cycle at least for now. Could we go back and retest it? The answer is yes. Are we likely to visit 3% before we go back to 1.5%? The answer there again is yes."
Rates have risen 56 basis points since the start of May on worries the Fed could slow its stimulus program sooner than expected.
But home prices have been rising on tight inventories- which effects affordability.
"Even if consumers wanted to hurry up and buy a home before rates rise even farther, they probably can't and that is because inventory is so tight, because there are so few homes on the market for sale now."
Kolko believes despite the rise last week, refinancings will fall- and that could create new opportunties for both banks and home buyers:
"It might end up getting easier to get a loan if you are looking to buy a home. The reason is when rates were very, very low there was so much demand for refinancing that banks could make lots of loans for refinancing and that in some cases stretched their capacity a bit, just in terms of the process of putting out all of these loans. As the demand for refinancing dries up, banks might have more room to make home purchase loans."
Kolko also points out that new mortgage rules- designed to restrict some of the toxic loans of the recent housing bubble- come into effect early next year.