Mortgage rates are steadily rising, and some housing analysts are already forecasting an impact on the market from the higher borrowing costs.
Heading into the spring buying season, the supply of homes remains at record lows, which presses home prices higher throughout the country. But as buyers face higher mortgage rate costs, will that prompt them to pause?
Mortgage rates were near record lows for most of 2017, but they’ve been on the rise ever since the new year. The average rate on the popular 30-year fixed-rate mortgage is up a quarter of a percentage point since the first week of the year, and rates have increased for the past four consecutive weeks. Freddie Mac reported last week the average on a 30-year fixed-rate loan was 4.22 percent. (Read more: Fed Move Doesn’t Suppress Mortgage Rates)
As the Federal Reserve prepares to raise its benchmark rate in the coming months, mortgage rates are expected to move higher, too. Mortgage rates are loosely tied to the yield on the U.S. 10-year Treasury.
Some homeowners may be less inclined to sell because they don’t want to lose their current record low rates that they secured after the recession. Some buyers, however, may want to move faster before rates rise even more and they face higher prices.
Lawrence Yun, chief economist of the National Association of REALTORS®, predicts that mortgage rates will reach 4.5 percent by the second half of the year.
Some home shoppers may be in a rush to lock in rates before those edge up even more.
“The increases that we’ve seen so far have only gotten people off the couch and into the market,” Glenn Kelman, CEO of Redfin, told CNBC in late January. “People are worrying that they need to hurry and buy a house now before rates go up further.”