Mortgage rates have climbed to their highest level in more than a year, a new report shows.
The average interest rate for a fixed-rate, 30-year loan was 4.32 percent this week, an increase of 0.15 percentage point from a year ago, mortgage giant Freddie Mac reported Thursday. It was the fifth straight weekly gain.
The last time the average mortgage rate was 4.32 percent was in December 2016. It hasn’t been above that level since April 2014.
The higher borrowing costs have not reduced demand for homes, local mortgage and real estate brokers said.
The upward trend “seems to have put a sense of urgency into home buyers,” as they try to lock down a home purchase before rates increase further, said Bob Moulton, president of Americana Mortgage Group in Manhasset. “The rates are increasing faster than anyone anticipated . . . Reading about interest rates now, it’s like the sports pages in the 1950s. People watch the stock market and they watch interest rates.”
The rising costs are still manageable for many buyers, he said. For every $100,000 borrowed, a ½-point gain in the interest rate causes about a $30-per-month increase in monthly payments, a Bankrate.com calculator shows.
However, rates are likely to increase further, which could prompt some buyers to seek out lower-cost, adjustable-rate mortgages whose interest rates reset after five to 10 years, Moulton said.
The rising costs are due to “some mild concern about inflation” as wages rise, he said. Investors believe the Federal Reserve could keep raising short-term borrowing rates to prevent the economy from overheating, which could indirectly lead to a rise in mortgage rates, he said.
The number of homes for sale is so low, and demand is so strong, that higher borrowing costs have not had an impact on the housing market, said Andy Yakubovsky, manager of Century 21 American Homes in Oceanside.
“Is it basically keeping a lot of people out of the market? Not yet,” Yakubovsky said. But, he said, “if it goes above 5 or 6 percent, I think you’ll see a lot of hesitation.”