Boston economic and mortgage experts said increased demand in the housing or property market might not have anything to do with mortgage rates, which a Freddie Mac survey reveals have been slowly on the rise.
The average 30-year fixed-rate mortgage rose from lows in February to a little more than 4 percent for the week ending on March 22. The rates broke the 4 percent barrier for the first time since October 2011, when the rates averaged 4.1 percent, according to a Freddie Mac press release.
Freddie Mac Vice President and CEO Frank Nothaft said in the press release that mortgage rates are “catching up with increases in U.S. Treasury bond yields.”
“Bond yields rose over the past two weeks in part due to an improving assessment of the state of the economy by the Federal Reserve, better than expected results of commercial bank stress tests and the likelihood of a second bailout for Greece,” Nothaft said.
But the slight increase in mortgage rates may signal an improved economy.
Cameron Dietrich, a senior loan consultant at the Boston-based MBA Mortgage Corporation, said the general trend is that when the economy is good, the rates are usually bad and vice versa.
Dietrich said the increase in demand might have more to do with people’s confidence in the economy than the mortgage rates.
“I think the fear is starting to alleviate,” Dietrich said. “People have been fearful of owning and buying over the past couple of years.”
Paula Callaghan, realtor at McCormick & Scanlan Real Estate in Jamaica Plain, said she has noticed a recent increase in demand for properties in Boston.
“There’s more than one demand on multiple properties I’m seeing here [compared to] last year if there was a property on the market,” Callaghan said. “I think the market is hot right now and people are taking advantage of the rates.”
But Dietrich said the recent increase in housing demand is correlated with the mortgage rates, since the rates were just as good last year.
“As far as purchases from last March to this March . . . it seems like more people are purchasing,” he said. “Interest rates are doing better, but I don’t think it has anything to do with rates.”
Rates probably will not have a huge influence on the housing market right now, said Professor Marc Rysman, who teaches economics at Boston University. If they continue to rise, he said, the rates would be more impactful.
Callaghan said she has noticed a recent trend of people saving their money to place down payments of up to 25 percent on properties.
The buyers who were waiting to see if the mortgage rates would drop are actually saving more money, she said.
Callaghan said she thinks the spike in interest rates is just a phase.
“I think [rates] will stabilize. I think its at a phase right now; it’s a good spike but I don’t think it’s going to spike like three years ago,” she said. “If the rates were to spike they would be around the 5 to 5.5 percent [range], which is quite good.”
It is impossible to predict whether the rate would go up or down, Rysman said.
“If the rate were going to go up,” he said, “they would be higher right now and if they were going to go down they would be lower right now.”
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