Real Estate
Homebuyers Beware: Mortgage Rates Spike To Highest Levels In Months
Compare mortgage rates in your Patch town, and find out how the Fed could influence the cost of your next home. [SPONSORED]
Mortgage rates have jumped to their highest levels in more than three months, making it more expensive for borrowers looking to buy a home or refinance an existing loan. And homebuyers are definitely taking note.
Mortgage applications fell 4.6 percent last week and home loan volume declined 6 percent, according to the Mortgage Bankers Association. In addition to higher rates, those saving up for a mortgage or looking to trade up to a bigger home face a shortage of available homes for sale. The National Association of Realtors has reported there’s just a 4.2-month supply, much lower than a healthy 6 months’ supply.
The silver lining? Despite the spike this week, September’s pace of new home sales was up 18.9 percent from the previous month’s, beating analysts’ expectations. Get a free monthly estimate with Bankrate's mortgage calculator.
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The Fed and the cost of your next home
Rates have surged in Bankrate’s weekly survey as renewed talk of tax reform on Capitol Hill has investors anticipating quicker economic growth. The rise in borrowing costs reflects reports that President Donald Trump is narrowing his picks for Federal Reserve chair and could choose a new leader who favors a faster pace of interest rate hikes.
But Trump also has indicated he may give current Fed chief Janet Yellen another term.
“You should expect the Fed to hike interest rates in December, and we may get a couple of rate hikes next year,” said Mohamed El-Erian chief economic advisor at Allianz, speaking this week at the Mortgage Bankers Association conference in Denver. “And that is regardless of who leads the Fed,” he added.
Mortgage rates rise
The benchmark 30-year fixed-rate mortgage rose this week to 4.13 percent from 4.04 percent, according to Bankrate’s weekly survey of large lenders. The rate is the highest since July 12. A year ago, it was 3.64 percent.
So what's that mean for the housing market in your neck of the woods? Take a look at local mortgage rates, and browse homes on the market.
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