The most recent jump in the 30-year rate above 5% could stall refinancings but if traditional cyclical expectations hold the economic optimism spurring the increase could bolster purchase volumes.
“We’re expecting the refinancing wave could taper off pretty quickly as rates get into 5% but for homebuying, if you have a stronger job market and more confidence in the economy that will overcome the resistance from another quarter point on the mortgage rate,” Calvin Schnure, director of economic analysis at Freddie Mac, told this publication.
“We’ve been expecting mortgage rates to rise above 5% in 2011 so that’s not a surprise,” he said, although he noted that the move above that psychologically important rate was earlier in the year than expected.
While some experts are concerned about inflation Schnure called these worries “overstated.”
“We’re not in a situation where we have above-trend GDP growth or an overheated economy so we’re not worried about inflation pushing rates up,” he said.
