Home buyers' anxiety rises along with mortgage rates

A weekly survey of lenders by Freddie Mac has shown increases five straight weeks. The average rate offered by lenders on plain-vanilla 30-year fixed-rate loans — of the type bought by Fannie Mae and Freddie Mac — rose to 4.83% last week from a low of 4.17% in early November, the survey found.

A separate survey by Informa Research Services indicates the 30-year average rate last week topped 5% for the first time in six months. Economists at the Mortgage Bankers Assn. project that it will rise to 5.1% by the end of 2011 and 5.7% in 2012.

That means higher monthly payments, making it harder to qualify for a loan. If you borrow $200,000 over 30 years, a 1-percentage-point increase to 5.5% from 4.5% would boost the amount you pay each month by $122 to $1,136.

$200,000? Very few home in Orange County you would want to live in costs $200,000.  It's closer to $450,000.  It going to take increasing to 6.5% to 7% before you see the impact in home prices that most potential buyers want to see.