Fixed mortgage rates experienced their fourth consecutive week of increase, according to the latest Freddie Mac Primary Mortgage Market Survey.
According to Freddie Mac, though rates have increased the housing market is continuing to show signs of strength.
Sam Khater, Freddie Mac’s Chief Economist, says, “Despite the recent rise in mortgage rates, both existing and new home sales continue to show strength – indicating the lagged effect of lower rates on housing demand. This, along with improved affordability, should push housing activity higher in the coming months.”
Freddie Mac’s data shows that the 30-year fixed-rate mortgage averaged 4.20% with an average 0.5 point for the week ending April 25, 2019, up from the previous week’s 4.17%, and down year over year from 4.58%. The 15-year fixed-rate mortgage averaged 3.64%.
“Mortgage rates moved up for the fourth week in a row, yet remain more than a third of a percentage point below year-ago levels,” said Danielle Hale, Chief Economist for realtor.com. “For the typical home on the market today, lower rates mean nearly $50 a month less on a monthly payment compared with last year’s higher rates, when 80 percent of the purchase price is financed. Paradoxically, rising rates may be good for current sellers, as buyers hoping to take advantage of low rates may hurry to find a home and lock their mortgage. Sellers who followed our recommendation to list in April, as opposed to waiting until May, may see an even stronger advantage this year.”
As Khater noted, sales are gaining strength despite this week's rate increase. A report from realtor.com predicts that overall, the housing market in 2019 may be stronger than originally predicted. A higher home price growth of near 3 percent, stronger homes sales and a slower pace of monetary tightening may lead to lower mortgage rates of 4.5 percent by the end of the year.
Long term mortgage rates have been brought down to around 4%, due to Fed’s decision to hold out on future rate hikes. Before the Fed’s decision, realtor.com’s data suggested an increase in upward momentum spurred by continued economic growth and monetary policy tightening.