After a months-long free fall, home mortgage interest rates appear to have hit bottom and have started climbing fast.
The upward trend the past three weeks has intensified keen interest in mortgage refinancing and jolted undecided borrowers into buying now before rates go even higher.
"I don't think it's likely rates will get down to 8.25 percent again," said Robert Van Order, chief economist for the Federal Home Loan Mortgage Corp. "From the standpoint of people making decisions, they shouldn't bet that rates will drop that low again."
Just as rates turned upward, first-time home-buyer Karla Scott locked in. The 31-year-old Ryder System marketing manager found her dream house and met with a mortgage broker in mid-January.
"As we sat down . . . I recalled that the day before rates had begun to climb," said Ms. Scott. "My broker advised me it would be a good idea to lock in at that moment."
By acting then, Ms. Scott got a 7.875 percent rate, fixed for seven years. She hopes to close on the house this week. "It's great that I made the decision when I did," she said.
Rate creep hasn't deterred others. "As rates go up, calls go up," said mortgage broker Susan Herman, president of The Mortgage Team. "It's as if people were thinking, 'Uh-oh.' One guy just called me and asked, 'Am I too late?' "
The 30-year fixed rate hit a national average of 8.68 percent, the ++ government reported on Jan. 31 -- the third consecutive week it has risen from a Jan. 10 low of 8.23 percent. The number of points required by banks are up as well, to a national average of 2.1. On Jan. 10, the average was 1.6 points. A point is a fee charged by a lender, equal to 1 percent of the loan.
Economists say there's no single reason why mortgage rates have risen while the prime rate, for example, has held steady for six weeks at 6.5 percent. The prime rate is a benchmark for many loans, including home equity loans.
Some experts attribute the rise in mortgage rates to Federal Reserve Chairman Alan Greenspan's recent statements that interest rates already were low enough to spur the economy, an indication the Fed might not lower rates again. Other experts cite rising rates on Treasury bonds, to which mortgage rates are tied.
Whatever the reasons, bankers say rates have risen off the bottom or are "bobbing across the bottom," as Barnett Bank economist John Godfrey puts it.
Lenders say borrowers are choosing to lock in rates rather than ** "float" while loan papers are processed in the hope rates will fall.