Farewell 3% Mortgage Rates

By Les Christie @CNNMoney

Say goodbye to ultra-low mortgage rates.

In the past month, rates have been on the rise and they are expected to continue to climb. Last week, the average rate on a 30-year fixed-rate mortgage climbed to 3.81%, up from 3.3% in early May, according to mortgage giant Freddie Mac. Meanwhile, those seeking a 15-year loan received an average rate of 2.98%, up from 2.56% a month earlier — a record low.

“It’s unlikely that rates will ever be that low again,” said Doug Duncan, Fannie Mae’s chief economist.

Those who didn’t take advantage of record-low rates have missed the boat — at least for now. Here are three reasons why.

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The Fed is going to stop bolstering the housing market. The Fed has kept rates at rock-bottom levels by buying up to $85 billion a month of Treasury bonds and mortgage-backed securities. That has enabled lenders to sell mortgage loans at low interest rates and recoup their money immediately — plus profits.

“Up until recently, expectations were that the Fed would begin to taper purchases of mortgage-backed securities (MBS) and Treasury bonds late in 2013, but that timeframe appears to have moved to September, possibly sooner,” said Keith Gumbinger, vice president of HSH.com, a mortgage information company.

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