A sudden U-turn in the direction of mortgage rates got 2013 off to a surprising start. A rise in mortgage rates? That seems a pretty rare occurrence these days. But the element of surprise is exactly what makes this an especially important time to compare mortgage quotes.
Yes, mortgage rates can rise too
According to mortgage finance firm Freddie Mac, January of 2013 saw 30-year mortgage rates rise by 18 basis points, to 3.53 percent. In theory, mortgage rates should be just as likely to rise as to fall, but that hasn't been the case in recent years. January's increase in rates was the largest for more than two years. Bigger picture, rates have been falling since 2006, so any increase is definitely outside the recent norm.
It remains to be seen whether January's rise in mortgage rates is just a hiccup or the beginning of a new trend. Either way, this kind of change can shake up the mortgage market, and consumers should be aware of that when they go shopping for a loan.
The impact on mortgage lenders
The rise in average mortgage rates means that lenders, as a group, are charging more for loans these days, but it also means something else. The mortgage market is competitive, meaning that mortgage lenders are aware that their interest rates have to stay close to the rates offered by other institutions. As a result, when mortgage rates are stable, mortgage quotes from different lenders all tend to gravitate toward the same spot.
However, when mortgage rates are on the move -- and especially when they move in an unexpected direction, as they did by rising in January -- you might see more of a difference in the rate quotes from different lenders. Some lenders are simply quicker to react than others; some may make it an active policy to try to anticipate mortgage trends, while others prefer to wait and see where the trend is going.
Whatever the reason, a significant change in interest rates can make for a wider range of mortgage quotes. That means it is more important than ever to compare mortgage rates these days. You can't assume that every lender is pretty much the same when the market is changing quickly.