Mortgage Rates on The Rise

For the first time since March, the average rate on a 30 year fixed mortgage passed the 6% mark. Rates are continuing to rise which will affect homebuyer’s bottom lines.

The rate on a 30 year fixed averaged 6.03 this week up from 5.98% last week. In the adjustable rate market, the average was 4.77% a week ago – today holding at 4.85.

Everyone blames the FED. Treasury yields are being pushed up by the Federal Reserve’s credit tightening campaign and be the threat of worsening inflation from continued high energy prices.

Mortgage rates have been projected to rise gradually over the next year, with the 30 year fixed rate expected to stay at or near 6% through 2005 and rise to 6.4 by 2006. This, according to Frank Nothaft of Freddie Mac.

Mortgage Deductions Threatened

President Bush’s Tax Reform Commission agreed to limit the amount of mortgage interest a homeowner may deduct from their taxes.
The cap and how it would be determined has not yet been decided. One possibility is basing it on FHA’s current mortgage cap, which, is now at $312,895. I don’t know how they’ll use that but the details will be finalized in a meeting scheduled for October 18, 2005.

Currently a homeowner can deduct mortgage interest on a loan up to $1,000,000. A lower limit could affect many homeowners in California because we have the most over 1 mil homes.

As Vince Malta put it, “Real estate has been driving the economy, but it won’t much longer” if mortgage deductions are curtailed.

Read the full text of the latimes.com article here, latimes.com.

Long Beach Property Tour

Dixie and I are going on a Property Hunt today. We've got 20 or so houses to look at in Long Beach. If you'd like to come along, call my cell phone, 562-449-8421 or e-mail Mobile E-mail