The benchmark 30-year fixed mortgage rate made the largest weekly jump since last April
Financial experts report the current mortgage rate has risen to a new high. Today’s average 15-year fixed rate, along with the average 5/1 adjustable-rate mortgage both climbed seven basis points to hit 4.28% and 4.27%, respectively. That new rate is the largest weekly jump since April 25, 2018. At that time, the benchmark rate rose 15 basis points, the highest point for the 30-year fixed rate since May 4, 2011.
According to the Mortgage Bankers Association’s latest weekly survey, that new rate didn’t affect the number of people applying for mortgages. In fact, mortgage applications increased for the second time in 2 months. We’ve also seen a 3.7% bump in refinance applications.
“In the first full week following Labor Day, applications bounced back,” said Joel Kan, associate vice president of economic and industry forecasting for the MBA, in a statement. “Purchase applications slowed earlier in the summer but have shown year-over-year increases for the past five weeks.”
Single-family permits dwindle
Single-family home building permits are an indicator of future building, and new construction isn’t helping our current inventory crunch for single-family homes. In fact, that number fell by 6.1% in August from July. Still, single housing permits are 6.5% higher than they were during the first eight months of 2017. Housing affordability, in general, is becoming a greater challenge because builders are faced with burdensome regulations while the cost of materials continues to rise. The escalating trade conflicts don’t help much either.
This week’s mortgage rates
The benchmark 30-year fixed-rate mortgage rose this week to 4.88% from 4.78%. Just four weeks ago, the rate hit 4.66%. This week, the 30-year fixed-rate average is 0.08% above the 52-week high of 4.80%, and 0.85% points higher than the 52-week low of 4.03%. Meantime, the 30-year fixed-rate jumbo mortgage jumped from 4.72% to 4.82%. That means that homeowners will pay $529.51 each month for every $100,000 they borrow on a 30-year fixed rate and $753.80 at the current 15-year rate. At the current 5/1 ARM rate, you’ll pay $493.11 each month for every $100,000 you borrow, up from $489.02 last week.
How the rate hike affects your wallet
In a previous blog, I shared 7 ways the Fed’s decisions affect your wallet. The points I made in that blog apply whether you have a mortgage or not. Prices of everyday goods will be impacted. Jobs and wages are indirectly affected because when America experiences a rate hike, Americans expect it will slow the economy. You can expect to pay more in credit card interest rates, and CD yields will also follow the direction of interest rates. Auto loans are relative to the prime rate, too, as are mortgages and home equity lines.
Good time to sell or buy a home?
The pros agree: rates are likely to continue ticking up in 2018 but will stay in the low 4% range in the remainder of the year. Many also believe that home prices will continue to rise due to low supply of homes for sale. So, what’s a home shopper to do?
“Buyers would be incentivized to purchase now, rather than wait,” says Craig Garcia, President of Capital Partners Mortgage. “The same home may cost them more to buy and pay for on a monthly basis a year from now.”
Other experts second Garcia’s advice and suggest the sooner you purchase your home, the more quickly you can enjoy wealth creation through real estate. All that being said, if you’re looking to move in Montecito, Hope Ranch or any of Santa Barbara’s upscale communities, give me a call at +1.805.886.9378 or email me at Cristal@montecito-estate.com. If you’re looking to sell, I have access to high-net-worth luxury buyers looking to own a piece of the coveted Santa Barbara lifestyle regardless of the current mortgage rate.