Mortgage rates are increasing to its highest level but the rise is not enough to disrupt the strengthening market of U.S. homes.

In February this year, a fixed rate mortgage for 30 years is estimated at 5.05%. This is the highest rate since the 2nd quarter of the previous year. This is also a sharp increase from a record low of 4.17% in the 4th quarter last year. However, this rise is not enough to end the recovering housing market according to most economists.

If the rates adversely affect the market, the federal government will surely find ways to pull down the interest rates. Patrick Newport, a global insight economist said that rates would have to increase to at least 6% to cause a decline in housing sales. But, the moment it reaches 5.5%, the government will surely take the necessary steps to control it from increasing further added Lending Tree’s chief economist Cameron Findlay.

Low interest rates in the 4th quarter of the past year contributed to the high sales reported by the National Realtors. Specifically, the sales increase by 15% from the third quarter of the same year. However, this figure is still below 20% than the previous year when the tax credits given by the federal government helped boost sales. Average prices of homes owned by single families increased annually in almost 78 of the 152 urban areas. But this is only a 0.2% increase all over the country. Newport further added that home prices will keep dropping and turn around in the middle of this year.

The increasing prices in the housing market may be attributed to the fact that there is a growth in jobs. Some cities that showed increasing rates include Boston, Washington and Austin. The rates grew by 4.2%, 8.1% and 4.1% respectively for each of these cities.

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