7 On Your Side: What higher 30-year fixed mortgages mean


However, the number of sales is 20 percent below average for the month of June -- a month when sales typically go up. According to DataQuick, the drop-off was due to a combination of fewer inexpensive foreclosure homes on the market and rising interest rates.

Thirty-year fixed mortgage rates eased a bit from a two-year high reached last week. The average 30-year mortgage is now at 4.37 percent. That's relatively low, but it is way up from a year ago when the rates were averaging 3.53 percent. 7 On Your Side looks at what it means to you.

The higher mortgage rates compared to a year ago, or even just last month, are already having a major impact on homeowners and potential buyers. Many have been forced to look at alternatives to get their new homes financed.

San Francisco resident Brian Miller loves his new condo.

"So great kitchen, brand new," said Miller.

It was a condo he almost couldn't afford. His original loan fell through and rapidly rising interest rates nearly forced him out of the market.

"It just made it more of an urgent rush to try to find something and get another contract, sooner before the interest rates continue to rise even more," said Miller.

Miller had his heart set on a 30-year fixed rate, but had to look at other options. He says the rise in rates would have cost him several hundred dollars a month. That's money he couldn't afford. So he sat down with his mortgage broker.

"Sometimes a shorter fixed period at a lower rate is very advantageous to people," said Serena Kokyer Greening from Guarantee Mortgage.

She got Miller into a 10-year adjustable rate mortgage at 3.75 percent.

"It probably made the purchase. I probably wouldn't have been able to go through with the purchase because the mortgage payment would have been too high," said Miller.

Adjustable rate mortgages aren't for everybody. If you're buying your last home or are 10 to 15 years from retirement, Kokyer Greening doesn't recommend getting an A.R.M.

"They're for anybody who knows they're not going to stay in a house that they're in for a long period of time. First time home buyers rarely buy the property they're going to be in for 30 years," said Kokyer Greening.

Greg O'Donnell is host of Money Matters on KSFO and CEO of O'Donnell Financial Group. He has seen a slight uptick of mortgage activity from homebuyers anxious to lock down their loan before rates go up further.

"Interest rates go up faster than they come down. So if someone's is trying to buy a home and they're under contract, they may not be able to time the bottom," said O'Donnell.

He's seen applications drop nearly 70 percent for refis in the last 30 days.

"Many people have stopped even applying. They're just making due with where they're at right now," said O'Donnell.

Miller is pleased he got his mortgage when he did.

"It feels great. I mean I'm very excited," said Miller.

O'Donnell predicts treasury bonds will go up another half percent before the end of the year and that will send mortgage rates even higher.

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