Fixed mortgage rates climb

Although remaining near historic lows, the Wall Street Journal reports that fixed mortgage rates have risen for the second consecutive week. The average rate for a 30-year loan reached 4.20 percent, up from 4.14 percent last week. 

The data released by mortgage giant Freddie Mac shows that rates have risen 0.16 percent from a year ago for 30-year mortgages.

According to the Mortgage Bankers Association, applications also experienced an increase last week, despite the rise in rates. Mortgage applications rose 10.3 percent, while the purchase index reached nine percent. Refinancing accounted for 54 percent of all applications, according to the source.

The rate increase commonly follows the trend set by the yield on the 10-year Treasury note, which rose from 2.44 percent last week to 2.64 percent. 

The real estate market in several areas is facing significant challenges. Rising home prices, limited inventory and rising interest rates have pushed listings out of reach for many buyers. Stagnant wage growth also compounds the problem.

In an address to Congress, Federal Reserve Chair Janet Yellen was quoted by the Associated Press as describing the job market as "far from satisfactory." She also expected short term rates to "remain appropriate for a considerable time" after bond purchases end. 

In related news, the Wall Street Journal reports that expert economists have recently lowered expectations for the recovery of the housing market. In January, economists expected housing starts to rise 20 percent for 2014 to 1.11 million units. This month, economists reviewed that projection and lowered their expectations to 1.05 million units to be started this year. 

With consumer finances and housing inventory remaining tight and interest rates rising , lenders must exercise caution in determining the creditworthiness of applicants to avoid unnecessary risk. Performing a credit risk assessment can help to protect both parties. 

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