Potential home buyers don’t delay, if you are looking for a great rate on an new Atlanta home, the time to buy is now! Fixed rates on mortgages are starting to rise. At the end of March, the Federal Reserve stopped purchasing mortgage-backed securities and GSE (government sponsored enterprises) debt. In the first full week of no Fed purchases, the Freddie Mac 30-year fixed-rate mortgage rose 22 basis points (from 4.99% to 5.21%).
During the same period, the 10-year Treasury note rose from 3.79% to 3.94%, a rise of 15 basis points. As a no-risk rule of comparison to 30-year mortgages, the spread between the 10-year Treasury note rate and mortgage rates is the more appropriate measure. This spread widened by only seven basis points, remaining at 127 points, well below the long-term average of 169 basis points.
A general rise in economic activity and continued borrowing by the federal government will push up long-term rates slowly, including mortgage rates. However, the rise will be modest and exert only a slight drag on housing demand as the economy, jobs and incomes start to rebound.
The good news is that the average family can now afford more than 70% of the homes that have been recently sold. At the peak of the market in the mid-2000s, the typical household could afford only 40% of the homes sold.
There are lots and lots of amazing homes for sale in Atlanta. Visit the Atlanta New Homes section of this site to get the latest news and home deals, steals and HOT prices.
Special thanks to NAHB’s Eye on the Economy for contributing to this report.