Mortgage rates on the rise

Associated Press

NEW YORK

Homeowners who delayed locking in super-low mortgage rates — think close to 4 percent for a 30-year fixed — may have waited too long.

Rates are creeping back up, in part because of the tax-cut deal in Washington. Now those in the market to buy or refinance have to decide whether to take what’s available or wait — and run the risk that rates will keep rising.

Freddie Mac, the government-backed company that buys and sells mortgages, said Thursday that average rates on 15- and 30-year fixed loans increased sharply from last week. It was the fourth-straight weekly rise. Fixed rates had been the lowest in decades.

“People thought for a while that rates would fall below 4 percent, and they hedged on that,” said New York mortgage broker and banker Andrew Toolin, who had just been on the phone with a client who is paying 5.875 percent on his mortgage.

A month ago, the client passed on what now looks like a once-in-a-lifetime opportunity: the chance to refinance at 4.125 percent. That would have put $321 more in his pocket each month.

He held out, thinking he could do even better. Now the rate is up to 4.75 percent. He could still shave money off his monthly mortgage payment, but not nearly as much — about $229.

“He’s wondering if he should wait for rates to go back down,” Toolin said. “He’s talking to his wife tonight about what to do.”

Rates are rising because they tend to follow the trends set by government bonds, like the 10-year Treasury bond. Investors are selling those bonds, causing their interest rates to rise, because of the deal President Barack Obama and Republicans reached to hold off tax increases in 2011 and 2012 and cut taxes for most Americans.

Some economists think the deal, which would effectively put money in Americans’ pockets right away, will help the economy heal faster.