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Interest rates begin inching upward as year ends

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Experts have been talking about it all year. The improving real estate market will bring an end to the historically low mortgage interest rates. The Primary Mortgage Market Survey was released by Freddie Mac last week. It shows the improving real estate market has resulted in higher average fixed mortgage rates.

Frank Nothaft is vice president and chief economist with Freddie Mac. Nothaft said:

"Mortgage rates rose slightly leading up to the Federal Reserve's policy announcement. The statement indicated that the central bank would begin to trim its bond buying program. The Fed noted that the economy expanded at a modest pace, but the unemployment rate remains elevated. In addition, housing starts in November rose to a seasonally adjusted annual rate of 1,091,000, the highest rate since February 2008. Permits were at a seasonally adjusted annual rate of 1,007,000 in November, 7.9 percent higher than in November 2012."

New lending guidelines are to take effect January 10, 2014. The Consumer Financial Protection Bureau hopes to protect home buyers from the same bad loan programs that contributed to the real estate market collapse. The changes have many in the mortgage industry concerned and some feel the new guidelines limit home buyer's mortgage options and will have a detrimental effect on the real estate market's recovery.

Home sales have continued to improve as we move toward the new guidelines and, as reported by HousingWire, CFPB director Richard Cordray recently told the Senate Banking Committee that the CFPB is not expecting perfect compliance when new mortgage lending and servicing rules take effect. He said that firms need to show a "good faith effort toward substantial compliance by that date."

Condray went on to say, "We are not going to be playing a game of gotcha with people in the early months."

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