Traverse City Record-Eagle

Business

June 28, 2013

Mortgage rates jump

(Continued)

“People are getting off the fence a little bit more or choosing to buy now instead of choosing to buy three months from now,” said Geraci, whose brokerage has 270 agents.

The rise in rates comes at a critical time in the housing recovery. Low mortgage rates have helped fuel home sales over the past year. In May, completed sales of previously occupied homes surpassed the 5 million mark for the first time in 3 ½ years.

And the number of people who signed contracts to buy homes leaped last month to the highest level since Dec. 2006, the National Association of Realtors said in a separate report Thursday. That suggests sales will rise even further in the coming months because there is generally a one- to two-month lag between a signed contract and a completed sale.

Greater demand, along with the tight supply of homes for sale, has driven up home prices. It’s also fueled more construction, which creates jobs and contributes to economic growth.

Geraci says a slight rate increase won’t put off buyers immediately because there just aren’t enough available homes for sale.

“So buyers that find a nice home, no matter what the rates are, are going to move on it,” Geraci said. “If there’s enough supply, people might sit and wait a little bit and see if the rates come down.”

Rising rates motivated Alex Backus to act two weeks ago and sign a contract on a $365,000, three-bedroom house in the Seattle suburb of Edmonds, Wash.

Backus, 30, had searched listings for two months before signing the contract. He locked in a 30-year loan at a fixed rate of 4.125 percent.

“Seeing that interest rates were starting to come back up, it seemed like now was the time to really start to get serious about buying a home,” said Backus, an aerospace engineer.

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