Mortgage Rates Rise Again, but Buyers Don't Mind

Doug Whiteman
Mortgage Rates Rise Again, but Buyers Don't Mind

After plunging in late March, mortgage rates have gone up for the third week in a row.

But homebuyers are saying, "So what?"

Applications for mortgages to buy homes (as opposed to refinancing) have hit their highest level in nine years.

This week's numbers

The average rate on 30-year fixed-rate mortgages has gone up to 4.12%, from last week's 4.17%, reports mortgage giant Freddie Mac.

One year ago, the benchmark mortgage rate was much higher, averaging 4.47%. The loans in Freddie Mac's survey come with an average 0.5 point.

With rates rising, mortgage applications overall fell 3.5% last week, led by an 8% drop in refinancings, the Mortgage Bankers Association says.

But applications for loans for home purchases went up 1% — to a level not seen since April 2010.

Why rates are doing what they're doing

Joshua Rainey Photography / Shutterstock")\
Low mortgage rates should mean healthy home sales this spring.

This month's increases in mortgage rates have been "modest," says Sam Khater, Freddie Mac’s chief economist. There's nothing to get alarmed about.

"While this week marks the third consecutive week of rises, purchase activity reached a nine-year high — indicative of a strong spring homebuying season," Khater says.

Rates are looking much better than they were in November, when 30-year mortgages hit a peak of almost 5%. And, they're expected to stay fairly low.

But if you're house shopping and see a great rate, you'll want to lock it in, because Freddie Mac's current forecast looks for 30-year mortgage rates to average 4.5% throughout 2019.

Could this be your year to buy a house? Calculate what your monthly mortgage payment would be.

This week's other mortgage rates

Rates on 15-year mortgages have edged up to an average 3.62%, from last week's 3.60%, Freddie Mac says. A year ago, rates on those shorter-term home loans were at an average 3.94%.

Meanwhile, 5/1 adjustable-rate mortgages — with rates that hold steady for five years and then can "adjust" up (or down) every year after that — are lower this week. They're being offered at initial rates averaging 3.78%, down from last week's average of 3.80%.

At this time last year, those ARMs were being offered at an initial rate of 3.67%, on average.

When you apply for a mortgage, you'll want to have your down payment ready to go. Find a good savings account at a great rate to help you pull that money together.