Mortgage rates hit 12-year high, climbing above 5% – Forbes Advisor

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Mortgage rates rose above 5%, further weighing on affordability in an already difficult housing market.

The average 30-year fixed-rate mortgage jumped 11 basis points to 5.11% for the week ending April 21 from the previous week, according to Freddie Mac. This was the highest rate since April 2010. A year ago, the 30-year averaged just 2.97%.

The average 15-year fixed-rate mortgage rate was 4.38% in the most recent week, down from 4.17% a week ago and 2.29% a year ago.

These rates do not include fees and other costs associated with obtaining a home loan.

Related: Compare Current Mortgage Rates

High house prices, higher mortgage rates: what does it mean?

Some experts worry that the combination of rising rates and still-high house prices could signal trouble for the housing market.

“While spring is typically the busiest season for buying a home, rising rates have caused some volatility in demand,” Sam Khater, chief economist at Freddie Mac, said in a statement. .

Mortgage applications for buying a home have fallen again over the past week, according to data from the Mortgage Bankers Association. And one weekly report showed the number of homes available for sale was 13% lower than a year ago and the median listing price was 13.6% higher.

Meanwhile, a trade group representing homebuilders said sentiment among its members fell for the fourth consecutive month in April. Newly built homes represent only a fraction of overall housing market sales, but a similar slowdown in the Housing market index from the National Association of Home Builders was an early signal of the peak of the last housing cycle in 2005.

How to prepare for buying a house

It’s always a good idea to start a home search as prepared as possible, but in an increasingly tight housing market, preparation becomes even more important.

Steve Reese, a realtor with NextHome Central Real Estate in Shawnee, Oklahoma, says he has his buying clients work closely with a mortgage broker or direct lender early in the process. Reese wants lenders to feel as comfortable with the borrower as if they had already gone through the full underwriting process, he says, in hopes of making their offers more competitive.

As for finding listings in the first place, “I advised clients not to get addicted to a brand new listing,” says Reese. In such a hot market, properties that were listed a week or 10 days ago may already seem “stale” and therefore may be less competitive.

“It continues to be a seller’s market, but buyers who remain interested in buying a home may find that the competition has softened moderately,” Khater said.

Bryce K. Locke