Last week’s noticeable uptick in interest rates is signaling the end of an era of super low interest rates, say two mortgage executives.
The Freddie Mac 30-year fixed mortgage rate spiked up for the first time in six weeks to 3.42% from 3.35% one week prior.
Bill Bent, executive vice president of Academy Mortgage, headquartered in Sandy, Utah, said he expects interest rates to rise an entire point this year, which would be particularly “dangerous” for the home buyer and especially the refinance market.
A rise of 1 point will “wreak havoc” on the market, he said. It will make mortgage payments a lot less affordable for buyers and will put an end to the refinance market, which makes up 75% of all mortgages currently, he continued.
Others say that they see rates rising, but are shifting gears to make up for the loss of refinances.
“Rates are slowly ticking up as the economy improves,” said Eddy Perez, president at Equity Loans, a in Atlanta, Georgia. With this in mind, we have focused more on the purchase market, getting GSE-approved so we can sell our loans directly to investors, and also keep the servicing on the loans that we purchase from correspondent partners, he said.