The average interest rate for mortgages is inching upward after November’s record low. However, hopeful homebuyers need not fear that they’ve missed the boat just yet.
On January 31, rates reached a four-month high of 3.53%, up almost a quarter of a percent from November’s record low of 3.31%, according to Bloomberg Businessweek.
The latest report from the Mortgage Bankers Association predicts that mortgage rates will climb over the next two years—but slowly. By the end of 2014, the group expects rates to increase at least a percentage point, but still remain lower than in the period before the housing bubble.
The factors behind these exceptionally low rates include the high rate of unemployment, the sluggish economic recovery and Federal Reserve policy.
These low rates will have a greater effect on those looking to refinance their homes than those who are looking to purchase homes, Jed Kolko, chief economist with real estate website Trulia, told USA Today. This is because home-buying is more closely related to jobs and lifestyle changes than current interest rates, he says.
Ultimately, rising mortgages rates are a sign of an improving economy. “If the economy went into the tank, mortgage rates would go lower,” Greg McBride, senior financial analyst at Bankrate.com, told Bloomberg Businessweek. “That’s winning the battle but losing the war.”