Progressively falling interest rates throughout 2010 presented significant refinancing opportunities to homeowners and helped salvage a much slower than normal purchase market.
Record low rates created in people a strong wait-and-see psychology: Why buy (or refinance) now when rates may go even lower next week or even next month?
These people fear that moving too quickly to make a purchase decision may cost them the chance to borrow at even lower rates.
Mortgage interest rates have fallen in only one week since December in the face of consistent, small weekly upticks.
So now those people looking for the "bottom of rate mountain" are no doubt wondering, "Well, did I miss the lowest rate? Or will I miss it? Maybe I need to get on this now."
And all of this translates into a unique opportunity to affect both the refinancing and purchase markets.
Interest rates still sit lower than this time last year. For the week ended Feb. 3, rates averaged 4.81% for the 30-year fixed mortgage, down from 5.01% a year earlier. Fixed rates for 15-year mortgages remain down as well. So slow-rising rates in the next several months could really encourage people to act.
The combination of subtly rising rates and stabilizing home prices has unanticipated benefits. It creates a sense of urgency for homebuyers and homeowners looking to refinance.
This, in turn, becomes an ideal opportunity for lenders to direct their marketing messages to tout now as the time to get home financing.
Realtors have been doing it since the beginning of the credit crunch.
Instead of lenders' lamenting any assumed harm from rising mortgage interest rates, they should more closely consider why modest increases can be to everyone's advantage: They will make individuals react.
