Ben Bernanke and the Federal Reserve have pretty much signaled last call at the Bar of Insanely Low Mortgage Rates. With the Fed now on record that it may begin to reduce its bond-purchasing program by the end of this year — suggesting the beginning of the end of repressed rate — the interest rate on a 30-year fixed-rate mortgage hit 4.25 percent on June 20. As recently as early May that same rate was at 3.5 percent.
Keith Gumbinger, vice president at mortgage information website HSH.com, expects the quick rate increase to put a fork in the refinancing market, which currently accounts for more than two-thirds of all new loan activity. After five years of record low rates, most homeowners have already refinanced at least once; the average rate on outstanding mortgages is below 5 percent. When the interest rate on a 30-year loan was at 3.5 percent back in early May, serial refinancers could still make the math work on doing another deal. Not now.
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