Mortgage rates ticked back up this week, averaging 6.30%, Freddie Mac reports. Despite the increase, rates remain well below the 6.76% average from a year ago. And buyers are starting to show up in force: Mortgage applications to purchase a home—often viewed as a gauge of future homebuying activity—jumped 21% in the latest week compared to a year ago, according to the Mortgage Bankers Association.
“After a brief pause, in part because of the elevated geopolitical uncertainties, potential home buyers certainly appear to be moving forward this spring and taking advantage of the more favorable inventory conditions in most parts of the country,” MBA Chief Economist Mike Fratantoni says.
Freddie Mac Chief Economist Sam Khater concurs. “It is clear that purchase demand continues to hold up as prospective buyers react to both modestly lower rates and more inventory to choose from than [in] the last few years,” he says.
Accepting a New Norm?
More consumers may be adjusting to a new normal in rates, showing greater willingness to move forward even if it means giving up their ultra-low mortgage rate from a few years ago. A newly released Coldwell Banker report found that real estate professionals say one in three sellers are showing willingness to give up their sub-5% mortgage rate this spring.
The so-called “lock-in effect” has played a major role in the housing market, with the report noting it has been “one of the biggest and most persistent constraints on housing supply” as homeowners refuse to sell.
Now, signs are showing that could finally be easing.
“On the seller side, many homeowners are listing because their circumstances require a change, even if it means giving up a historically low mortgage rate,” says Jason Waugh, president of Coldwell Banker Affiliates. “Working through the lock-in effect will take time. But we are starting to see early signs that it is loosening, particularly in the Midwest and in the West, which could have a meaningful impact on inventory.”
Slightly more than half of outstanding mortgages have a rate that is 4% or lower, while 78% of borrowers have a rate below 6%, according to an analysis from Realtor.com®.
Mortgage Rates This Week
The Federal Reserve voted Wednesday to hold its benchmark short-term rate unchanged at its April meeting. While the Fed doesn’t directly set mortgage rates, its decisions can influence them. Mortgage rates, however, are more closely tied to long-term Treasury yields, which economists said moved higher this week amid rising oil prices tied to ongoing geopolitical tensions. That pushed the bond yield—and then mortgage rates—up as well.
Freddie Mac reported the following national averages with mortgage rates for the week ending April 30:
- 30-year fixed-rate mortgages: averaged 6.30% this week, rising from last week’s 6.23% average. A year ago, 30-year rates averaged 6.76%.
- 15-year fixed-rate mortgages: averaged 5.64%, increasing from last week’s 5.58% average. A year ago, 15-year rates averaged 5.92%.
