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By BankingMyWay Staff
After almost three consecutive months of declines, interest rates on fixed-rate mortgages have risen by nearly half a percentage point since last week, according to data from BankingMyWay.com's. But this jump in rates has more to do with supply and demand than it does with an end to historically low rates.

Mortgage rates are difficult to predict because of the variety of factors that contribute to their movement. But most economists agree that the steady drop in recent months is largely due to government intervention. The Federal Reserve's plan to buy $500 billion in mortgage-backed securities by June 2009 pushed rates on 30-year fixed-rate mortgages (FRMs) down to less than 5% for the first time in decades. As a result, homeowners rushed to refinance their mortgages.

"Mortgage-lending services are at full capacity as everyone tries to refinance at these low rates," says Bob Walters, chief economist with Quicken Loans. "As a result, some lenders are starting to increase their rates to help control activity."

Interest rates on 30-year and 15-year FRMs are currently 5.5% and 5.35%, respectively. And while Walters doesn't expect rates to head much higher over the next six months, he also doesn't see them getting all that much lower. "There's only so much the government can do," says Walters. "As refinancing increases, the supply of mortgage-backed securities will increase as well. That will drive down prices and cause interest rates to go up. It would take a monumental effort to get interest rates down around 4%."

Walters recognizes that many would-be refinancers are holding out for better rates, but he suggests they stop playing the waiting game. "I truly never thought that people would ever get 5% to 5.25% on a 30-year fixed-rate mortgage," says Walters. "People might regret waiting around for better rates."
Take, for instance, current rate offers in the New York area: For qualified borrowers , interest rates on 30-year FRMs are still in the low 5% range: HSBC Bank (HTB) offers 5.125%, whereas Valley National Bank (VLY) and KeyBank (KEY) both offer 5.25%.

It’s difficult to tell where rates will be a month -- or even a week -- from now. For homeowners considering refinancing, figuring out whether current rates will save them enough money to justify the cost of refinancing will help with that decision. For more on how to do that, see here.

For more rate offers in your area, go to BankingMyWay.com and enter your ZIP code.

— For more ways to save, spend, invest and borrow, visit MainStreet.com.