Mortgage rates are marching higher again, with the cost to borrow money to purchase a home hitting a new high for the year. According to Freddie Mac, for the week that ended April 19, the average rate for a 30-year fixed-rate mortgage increased five basis points to 4.47%, the highest level since January 2014. Freddie Mac said that this also marks the largest weekly increase since February 2018.
Rates were pushed higher as Treasury yields increased. "According to the Beige Book, economic activity in March and early April continued to expand at a moderate pace; however, there is concern from various industries surrounding tariffs," said Freddie Mac in announcing weekly mortgage rates. "Following Treasurys, mortgage rates soared."
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As borrowers are faced with increased costs to access money and rising home prices, Freddie Mac said it has found that shopping for a loan with more than one mortgage lender can get consumers a better interest rate. In addition to the 30-year fixed-rate mortgage interest increasing, Freddie Mac reported that the interest rate on a 15-year fixed-rate mortgage ended the week at 3.94%, 0.07 basis points higher, while the interest rate on a five-in-one adjustable-rate mortgage stood at 3.67%, up 0.06 basis points for the week and 0.57 basis points higher on a year-over-year basis.
With the spring real estate season in full swing, there are concerns that rising rates on mortgages, a lack of affordable housing inventory and increasing home prices could shut a lot of borrowers out of the market. That is particularly true for first-time buyers who are extremely price sensitive. But those fears may prove to be unfounded given a nearly 5% increase in mortgage applications for last week. According to new data from the Mortgage Bankers Association, applications for new home loans increased 4.9% in the week ending April 13. Refinance applications were up 4% from the week earlier, while purchase applications jumped 6%.
Buyers could be entering the market now to get ahead of interest rates that could go even higher, helping the all-important spring real estate season. The uptick in mortgage applications also comes on the back of two weeks of declines from those seeking to apply for a home loan. "The rapid growth in home prices and the slight increase in rates are headwinds, but we think the economic and demographic fundamentals will prove stronger," said Michael Fratantoni, the chief economist at the Mortgage Bankers Association, when announcing the weekly applications data. "Beyond that, we are seeing what looks like typical or better seasonal improvements in homebuyer demand."