If you’re looking to buy a home or refinance an existing one, mortgage rates today can have a substantial and lasting impact on your finances. Staying aware of the current housing market and mortgage rate trends can help you decide if it’s time to kick the home-buying process into high gear — or if you should wait until next year.
Here’s what the housing market and mortgage rates look like in June, and what you can expect for the rest of 2015.
Read: 2015 Interest Rate Projections
June 2015 Housing and Mortgage Rates Trends
Average Mortgage Rates Today
In 2015 so far, mortgage rates have fluctuated but are largely trending up. According to data from Freddie Mac, average fixed 15- and 30-year mortgage rates reached a high in mid-March, dipped in early April and rose again throughout May.
While rates have fluctuated, they still remain favorable for borrowers, with Freddie Mac reporting the national averages as of June 11 for fixed-rate mortgages are still lower than this time last year: 4.04% for 30-year terms (compared to 4.20% in 2014) and 3.25% for 15-year terms (compared to 3.31%). Adjustable-rate mortgages, on the other hand, are slightly higher than they were in the start of June 2014; average rates on 5/1 ARMs currently stand at 3.01% (compared to 3.05% last year).
Cody Kessler, a mortgage banker and branch manager for HomeBridge, said he expects mortgage rates will continue rising in June and coming months, and that the days of 30-year rates below 4% will soon be behind us. However, Kessler also expects mortgage rate increases to be slow and steady.
“The market’s volatility is not so substantial that there will be wide swings,” Kessler said, noting that a lot of the factors that influence rates have already been “baked into” today’s mortgage rates by financiers’ analyses and projections.
Home Sales and Prices Are on the Rise
The housing market has continued to strengthen as 2015 has progressed. The most recent housing market report from CoreLogic found that home sales were up 6.8 percent from April 2014, rising 2.7 percent month-over-month. The National Association of Realtors also saw higher home sales in April, with its chief economist, Lawrence Yun, projecting sales will continue to rise heading into summer if inventory can keep up.
As this upswing in sales shows, demand for homes is rising even though housing inventories have been tight in Spring 2015. Because of this high demand and low supply, home prices have also increased. CoreLogic predicts a 5.3 percent rise from April 2015 to April 2016.
Read: 10 Cheapest States for Mortgage Rates
Other Factors Affecting Mortgage Rates in June
Readers looking for the bigger picture behind the steady rise of mortgage rates should investigate the different factors that affect them. Here’s a look at what those factors are and how they could affect rates this year.
Federal Reserve interest rates: Fed Chair Janet Yellen expects a 2015 rate hike if the economy follows her projections, reports Bloomberg. Mortgage lenders will likely be adjusting rates upwards in anticipation of this rate hike, so borrowers will see a slow-and-steady increase, rather than a spike.
Employment and wage growth: According to Kessler, this is the factor to watch, since new jobs, higher employment and better pay will indicate more Americans’ readiness for homeownership. This could increase demand and swing mortgage rates up, especially in areas with particularly strong jobs markets.
Housing markets: While they don’t have a direct effect on mortgage rate trends, rising home demand and prices will give lenders a little more leeway to push rates up, though likely only very slightly.
Other factors, like higher inflation and global markets, can also affect mortgage rates.
What Today’s Mortgage Rates Mean for Home Buyers
If you’re considering rushing into buying a home just to lock into a lower mortgage rate before they rise, you should reconsider, said Kessler. “Never buy a house based on interest rate,” Kessler said. “That’s a mistake, and while it’s great for people in the housing market who want your money, it will put the home buyer in a dangerous situation. Don’t try to ‘catch’ the market.”
With rates increases expected to remain slight, consumers looking to buy a home in coming years have plenty of time to get their finances in order and find a home that’s well within their budget.
Kessler also pointed out that while rates are an important part of financing, they aren’t the only thing a borrower should look for in a lender. “The consumer should really understand the lender and educate themselves about how the lender makes its money and where it tries to cut costs,” Kessler said. This will tell him if the lender is truly offering great value — and not just a surface-level “great deal.”
“Look for accuracy, diligence, protection, control, risk-aversion,” Kessler said. When you find a lender that has those, “then work on details like loan terms and mortgage rates.”
This article originally appeared on GOBankingRates.com: Quarterly Mortgage Rate Trends for June 2015
This article by Elyssa Kirkham first appeared on GoBankingRates.com and was distributed by the Personal Finance Syndication Network.
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