Mortgage rates are climbing from record lows, but the rise is not deterring local home buyers, according to brokers.

The average rate on a 30-year fixed-rate mortgage increased from 3.40 percent on April 25 to 4.51 percent on June 11, according to mortgage buyer Freddie Mac.

The rate dropped slightly on Thursday to 4.37 percent after concern dissipated in financial markets about the Federal Reserve's potential slowdown of its bond purchases.

Chairman Ben Bernanke said last week the Fed will continue to stimulate the economy, even after it begins to slow the bond purchases.

Even with the recent gains, mortgage rates are still attractive, brokers said.

"The rates are still really low. It's still a great time to buy," said Teresa Gregory, managing director of mortgage services for York Traditions Bank.

Though the number of customers refinancing their mortgages has decreased significantly, the number of purchases hasn't slowed down, Gregory said.

The impact: For an average homebuyer purchasing a $150,000 house, the monthly mortgage payment would have been $652.81 at the previous 3.25 percent interest rate.

At a rate of 4.25 percent, that payment would climb $85 to $737.81 a month -- a 13 percent increase.

"The bigger issue for first-time homebuyers is purchasing power," she said.

For example, if a buyer was preapproved in April, at the lower rate they could have purchased a home for $150,000.


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Now, to keep their payments at $652.81 a month, they'd be approved for a $132,000 loan.

"That's $18,000 less in purchasing power, so many buyers are probably regrouping and looking at homes in a lower price range," Gregory said.

Brokers were prepared for rates to increase from their record low 3.31 percent, they said.

"We were all prepared for rates to move up. They were so low for so long, but they're still extraordinarily low and very desirable," said Connie Kern, senior loan officer for M&T Bank.

Now is "absolutely, 100 percent," a great time to buy because rates probably aren't going back down, she said.

"My gut, and the general opinion of all of us here, says the rates will continue to rise for the remainder of the year," Kern said.

Applications: Mortgage applications decreased 2.6 percent last week, compared to the previous week, according to the Mortgage Bankers Association. But those results included an adjustment for the Fourth of July holiday, the group reported.

July is typically a slower month in local real estate, said John LeCates, a local Realtor and former president of the Realtors Association of York & Adams Counties.

"Though the rates did go up a little more, if anything had an impact on July sales it was vacation time and the heat," he said.

As mortgage rates have climbed during the last two months, home sales have remained stable, LeCates said.

A matter of price: Because some buyers have less purchasing power, they are seeking lower prices, he said.

"In this market, buyers still think sellers are asking more than they should. Everybody tries to negotiate the price," LeCates said.

Most sellers have priced their homes correctly, and negotiation has always been a part of the home buying process, regardless of mortgage rates, he said.

Mortgage rates have increased, but they're still low enough to make it a good time to buy, LeCates said.

"First-time homebuyers have watched rates and costs go up since they started looking, but it's not stopping them from buying," he said.

-- Candy Woodall can also be reached at cwoodall@yorkdispatch.com.