Mortgage Rates Hit 12-Year High, Climbing Above 5%

Rates for home loans have pushed above 5%, further straining affordability in an already challenging housing market.

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

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

Those rates don’t include fees and other costs associated with obtaining a home loan.

Related: Compare Current Mortgage Rates

High Home Prices, Higher Mortgage Rates: What’s it Mean?

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

“While springtime is typically the busiest homebuying season, the upswing in rates has caused some volatility in demand,” said Sam Khater, Freddie Mac’s chief economist, in a statement.

Applications for home purchase mortgages slipped again in the most recent week, according to data from the Mortgage Bankers Association. And a weekly report from showed that the number of homes available for sale was 13% lower than a year ago, and that the median listing price was 13.6% higher.

Meanwhile, a trade group representing home builders said sentiment among its members fell for the fourth straight month in April. Newly-constructed homes make up a fraction of overall sales in the housing market, but a similar downturn in the Housing Market Index from the National Association of Home Builders was an early signal of the top of the last housing cycle in 2005.

How to Prepare to Purchase a Home

It’s always a good idea to start a house hunt as well prepared as possible, but in an increasingly strained housing market, prepwork becomes even more important.

Steve Reese, a realtor with NextHome Central Real Estate in Shawnee, Oklahoma, says he has his buyer 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’d already gone through the full underwriting process, he says, in the hopes of making their bids more competitive.

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

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

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