Mortgage rates are up. Here's what Long Islanders can do while house hunting.

Long Island homebuyers are facing a volatile mortgage market this spring that is raising the cost to buy a home, as the average 30-year fixed mortgage rate hit its highest level since September this week.

The average rate climbed to 6.38% for the week ending Thursday, marking the fourth straight week the rate has increased since the start of the Iran war on Feb. 28, according to new data from mortgage giant Freddie Mac.

House hunters on the Island are already facing prices near record levels and intense competition for homes. The uncertainty around rates poses the latest challenge just as the prime selling season kicks off.

For Gigi Stefanizzi and her husband Matthew, the rate increase comes at a bad time as they prepare to move with their 18-month-old daughter from their house in Holtsville to a larger home.

"It's very defeating seeing these high interest rates because I feel like you're saving so much money to put into a house and then it doesn't help with your monthly payments," she said.

The family is looking for a split-level house in Ronkonkoma, Holbrook, Holtsville or Farmingville because they have outgrown their three-bedroom, one-bathroom house, which lacks a basement or garage. They are determined to upgrade even if rates rise further.

The couple bought their house in Holtsville three years ago for $446,000 and their interest rate was about 6.38%. But because rates haven't fallen, Stefanizzi said she expects the couple's future monthly payment for a larger home will be about $1,000 higher, and they will need to cut back on their spending to make it work.

"We'll be stretching our finances to be able to accommodate that for sure,” she said. "It's doable, but it's not the best scenario."

What's the cost difference between 6% and 6.38%?

For a borrower taking out a $500,000 mortgage, the increase from 6% in early March to 6.38% this week represents $123 more in their potential monthly payment, according to a Newsday analysis using Bankrate's mortgage calculator. Over 30 years, a borrower paying today's average would spend about $44,000 more on interest over the loan term than if they secured a 6% rate.

Concerns about higher consumer prices, particularly for energy, since the start of the war have driven up the 10-year Treasury yield, which hit its highest point since July on Thursday. Mortgage rates tend to rise in tandem with the 10-year Treasury yield during periods when investors are most concerned about inflation, according to consumer finance website Bankrate.

Still, the average mortgage rate remains below its level from a year ago, when it was 6.65%, as well as its recent high of 7.79% in October 2023. At that point, rates reached their highest point since 2000.

"The uncertainty is more the issue than the interest rate," said Larry Matarasso, a senior loan officer at mortgage broker Green River Capital in Plainview. "That is more of a problem [if] I'm trying to budget."

Prepare for different rates — and shop around

One way buyers can put themselves in the best position when rates are unpredictable is to examine their monthly costs in various rate scenarios, Matarasso said.

He recommended buyers discuss with their loan officer how their monthly payment would change at rate levels between 6% and 7% to determine whether they would still qualify for a loan and feel confident a purchase fits their budget.

Beyond budget tactics, borrowers can also shop around among different lenders to find the best rate.

Research from Freddie Mac showed in 2022, when rates were rising quickly, borrowers who sought quotes from at least two lenders could have saved as much as $600 annually and those who sought four quotes had potential savings of $1,200.

Rate locks

For borrowers looking for more certainty, lenders offer options to lock an interest rate for a defined period, such as 60 or 90 days. Many lenders require that a buyer has a contract to buy a home before locking a rate, and borrowers must close within the rate lock period. Some buyers might have the option to extend a lock but that often comes with a fee, according to Bankrate.

"If there's a comfortability level with where the rates are, my suggestion is just to lock the rate, and then you'll have the peace of mind," said Christopher Roberti, market leader at LoanDepot in Rockville Centre.

But if rates fall, borrowers may not be able to take advantage of the lower interest costs. Some lenders offer a float-down option to capitalize on a lower rate if they fall. This can also come with a fee and lenders may require rates to fall by a certain amount, such as half a percentage point, before borrowers can take advantage of the clause.

Lower budgets

Another option is to refocus the home search at a lower price point.

"Try not to get in the habit of shopping at the top of your budget," Roberti said. "Build yourself a little bit of a conservative buffer, so if rates do go up, you will have a little bit of wiggle room."

Ultimately, it's important that homebuyers feel confident they can withstand unexpected expenses as they become homeowners, said Thomas Rudzewick, president and CEO of Maspeth Federal Savings, which has branches in Queens and New Hyde Park. 

"We want to make sure we can put somebody in a house that you can afford," he said. 

Newsday's Nicholas Grasso contributed to this story.