Mortgage Rates Soar, Loan Applications Plummet

Historically speaking, mortgage rates are still extremely low and money - for lack of a better term - is pretty cheap at the moment. But in a market as skittish and uncertain as this one, any change that can be perceived as negative is going to grab headlines and perpetuate the fear that is strangling the global economy.

The early June average fixed rate for a 30-year mortgage "jumped" to 5.57 percent, which is up nearly a full point from the record low of 4.61 percent in March. Of course, that is going to have a negative impact on the number of applications for refinancing, but it may not be quite the disastrous omen for any new home purchasers that are out there.

5.57 percent on a 30-year fixed mortgage is still very attractive and affordable to people that are in the market to buy new homes. However, it's probably not quite low enough to drive or sustain a high demand for refinancing existing loans, since most people have been able to purchase or re-finance homes in the last few years for rates that are close enough to that 5.57 percent as to not make a re-fi sensible.

That will certainly generate some ill feelings in the housing sector, but the reality is that real estate is very affordable right now, even with the recent "spike" in interest rates. Qualified buyers can almost name their price and take properties at a fraction of their purchase prices only a few short years ago. But no one seems to be willing to make those moves, so the market will continue to flounder.