The average rate for a 30-year fixed rate mortgage rose eight basis points to 3.95% for the week ending Feb. 23, reflecting both an improving economy and housing market, according to new figures compiled by Freddie Mac.  That figure is up from the 40-year low of the index of 3.87%.

The irony is that rates have improved by .25 to price in the last two weeks.  The moral of the story is that the worsening rates are still historically low.  So the downgrade is akin to switching your red-carpet date from Jessica Alba to Jessica Biel (or vise versa).

Right now, I can lock in a conforming, 30-Year Fixed at 3.625%, and the only thing the borrower would have to pay for is the appraisal.  That same loan six months ago would have been 4.0% to 4.125%, more of a Jessica Simpson.

I remember when people were clamoring for a 6% 30-year fixed, so I am ecstatic that I can deliver sub-4 fixed rates, but I am nervous.  Pundits say rates will stay low through 2014, but I’m not as bullish on this bear of a real estate market.  Typically, housing sales pick up in the spring and summer.  To boot, the number of Americans filing first-time claims for unemployment insurance payments last week held at a four-year low, more evidence the labor market is improving.  Both or these figures indicate higher rates are on the horizon.

While major news outlets are reporting that credit guidelines are loosening, this broker hasn’t seen any evidence of that with the wholesale mortgage banks.

So while I sit and wait to see what the coming months hold for rates, I would not recommend that borrowers do so; Those who do might just get stuck with Jessica Tandy.

Steve Bush
Steve@OCLoanBroker.com