"A Greek default is not scaring people as much as it used to," he says. "It's like, if you talk about something enough, you get used to it, even if it's bad. They keep kicking the can down the road, but nothing is actually happening yet."Sinnott says this week's rate increase already affected the volume of refinance applications.The volume of mortgage applications declined 5 percent last week, compared to the previous week, according to the Mortgage Bankers Association.Higher fees add pressure to ratesAnother factor adding pressure to rates is a recent increase in fees Fannie Mae and Freddie Mac charge lenders. That increase will get passed on to borrowers and will translate into about an eighth to a quarter of a percentage hike in interest for a 30-year fixed mortgage.But Fed wants low ratesThe Fed isn't as optimistic about the economy, and it's determined to keep rates low."While indicators point to some further improvement in overall labor market conditions, the unemployment rate remains elevated," read the Federal Open Market Committee's statement on Wednesday. "Household spending has continued to advance, but growth in business fixed investment has slowed, and the housing sector remains depressed."The Fed says it will keep the key federal funds rate near zero until late 2014. Previously, it had committed to keeping the rate low until mid-2013. While the federal funds rate isn't directly tied to mortgage rates, it influences their direction.It also will continue to reinvest in long-term securities and mortgage-backed securities, which is another way to keep rates low.David Kuiper, a mortgage planner at First Place Bank in Holland, Mich., says he doesn't foresee higher rates anytime soon."People still see investing in the United States as a safe haven," he says. "But you don't want to take a chance."That's especially true for homeowners who have rates in the 6 percent or 7 percent range."If they lock now, they are still so ahead of the game," he says.Powered By iWebRSS.co.cc
Mortgage rates 'to be volatile'
27 January 2012 Last updated at 06:58 ET Brokers are revelation new borrowers to expect mortgage rates to fluctuate in the coming months, owing to economic uncertainty. A number of vital lenders have increased the cost of a mortgage for new borrowers in recent days. Brokers suggest that the increased activity is likely to be followed by an "ebb and flow" in the mortgage market in the first half of 2012. Lenders are concerned about the cost of funds to lend in the current climate. Uncertainty in the eurozone means that they do not want to overstretch themselves with lending, when there is a chance that accessing funds could become more expensive. 'Shop around' In recent days, some of the vital lenders have increased their mortgage rates by up to 0.3 percentage points. Others have changed the loan-to-value bands, so borrowers might not always get a cheaper deal by offering a larger deposit. "It really does pay to shop around at the moment if you are looking for a mortgage as some lenders are much more expensive than others," said Aaron Strutt, of Trinity Financial. Lenders tend to move as a herd, as they do not wish to be inundated with mortgage applications if they suddenly become cheaper than their rivals. Andrew Montlake, of mortgage broker Coreco, said: "We are going to see a period in which the Bank rate remains stable, so lenders will manage the business they want by increasing or decreasing their rates." A few lenders have reduced mortgage rates for new borrowers in recent days. He predicted that this volatility would continue for the first half of the year at least, until there was a clearer picture in the eurozone crisis. Long-term costs for lenders have risen, he said, owing to uncertainty as a resul! t of the crisis. Powered By iWebRSS.co.cc