As spring homebuying season revs up, mortgage rates are drifting down. This week, a slight decline in mortgage rates has been accompanied by an increase in people applying for loans to buy homes. Purchase applications are up 5 percent, compared to the same week a year ago, according to the Mortgage Bankers Association.
Home shopping is popping
More people are buying homes now, even though mortgage rates are significantly higher than a year ago. That’s a sign that rates don’t exert much influence on home sales. People buy homes when they have enough money saved up for a down payment, they earn enough to make the monthly house payments, and they’re at a point in life when they’re ready to own.
Pending home sales in March were up less than 1 percent compared to a year earlier, but that’s because there just weren’t enough affordable homes for sale, says Lawrence Yun, chief economist for the National Association of Realtors.
Home prices keep going up
“Home shoppers are coming out in droves this spring and competing with each other for the meager amount of listings in the affordable price range,” he says, adding that the lower the home’s listing price, the fiercer the competition. That makes it worthwhile to apply for a mortgage so you can get preapproved.
Home prices have been rising faster than incomes and overall inflation. When you exclude foreclosures and short sales, home prices rose 7.1 percent in the 12 months ending in March, according to CoreLogic. The data and analytics company expects prices to rise 4.9 percent over the next 12 months.
Recent economic data has been relatively weak, says Rick Sharga, executive vice president of Ten-X. That’s why he says there’s little motivation for mortgage rates to rise soon. “That’s good news for borrowers looking for affordable homes, since house prices continue to rise, and good news for the housing market, as it should help stimulate sales in the important spring homebuying season.”
Mortgage rates this week
The benchmark 30-year fixed-rate mortgage slipped this week to 4.18 percent from 4.19 percent, according to Bankrate’s weekly survey of large lenders. A year ago, it was 3.77 percent. Four weeks ago, the rate was 4.24 percent.
The mortgages in this week’s survey had an average total of 0.22 discount and origination points. That’s slightly lower than last week.
Over the past 52 weeks, the 30-year fixed has averaged 3.93 percent. This week’s rate is 0.25 percentage points higher than the 52-week average.
■ The 15-year fixed-rate mortgage fell this week to an average 3.39 percent, from 3.43 percent.
■ The 5/1 adjustable-rate mortgage fell to 3.46 percent from 3.48 percent.
■ The 30-year fixed-rate jumbo mortgage was unchanged, at 4.14 percent.
At the current 30-year fixed rate, you’ll pay $487.85 for every $100,000 you borrow, down from $488.43 last week.
At the current 15-year fixed rate, you’ll pay $709.49 for every $100,000 you borrow, down from $711.45 last week.
At the current 5/1 ARM rate, you’ll pay $446.81 for every $100,000 you borrow, down from $447.93 last week.