The Times Herald (Norristown, PA)

Mortgages get more expensive

Rates hit near 4-year peak

- By Alex Veiga and Josh Boak AP Business Writers

The cost of borrowing for a home keeps going up, a potential obstacle to would-be buyers at a time when home prices are at alltime highs in more than half of major U.S. markets.

Average long-term mortgage rates have been rising steadily this year and are now at the highest level in almost four years. That translates into higher mortgage payments and more money paid out over the life of the typical 30year home loan.

Mortgage buyer Freddie Mac said Thursday that the average rate on 30-year, fixed-rate mortgages rose to 4.38 percent this week, up from 4.32 percent last week. That’s the highest rate since April 2014. At the start of the year, the average rate was just under 4 percent. The rate on 15-year, fixed-rate loans rose to 3.84 percent from 3.77 percent last week.

The pickup in mortgage rates dims prospects for would-be homebuyers struggling to compete in a housing market where a thin inventory of homes for sale continues to drive up prices.

The median U.S. home price climbed 5.3 percent in the last quarter of 2017 to $235,400, according to the National Associatio­n of Realtors. The trade group said that prices for single-family homes hit record highs in 114 of 177 major metropolit­an areas that it tracked.

The increases in home prices have been growing at a pace more than double the gains in average hourly earnings.

“We’ve seen 5-to-7 percent price gains since 2015, and we’re still seeing prices rise this year,” said Javier Vivas, director of economic research at Realtor.com. “When you have that sort of growth with prices, and now with mortgage rate increases, that’s putting a dent especially in the entry level buyer.”

Recent wage gains and rising prices are stoking concerns about inflation picking up, which has caused investors to seek higher interest rates. Mortgage rates are closely aligned with the yield on 10-year U.S. Treasury notes, which has climbed above 2.90 percent from 2.43 percent at the end of last year.

Just a few months ago, homebuyers had the benefit of average 30-year mortgages that were 3.78 percent in September. The low mortgage rates had eased some of the price pressures facing wouldbe homebuyers. Now they might find it harder to save for a down payment and purchase a home.

 ?? THE ASSOCIATED PRESS ?? A home is posted for sale in Walpole, Mass.
THE ASSOCIATED PRESS A home is posted for sale in Walpole, Mass.

Newspapers in English

Newspapers from United States