Mortgage rates are up but there’s still good news for homebuyers.
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Mortgage rates continued their ping-ponging this week, inching up to 3.69%, according to Freddie Mac. That’s .12% higher than last week, but still 1.16% lower than this time last year.
The Mortgage Bankers Association, which measures rates on all loans (not just conventional ones, like Freddie Mac), has rates up to 3.92% for the week.
The jumps may be a disappointment to hopeful homebuyers, but according to experts, it’s no cause for alarm just yet — especially considering the week’s other news.
As Sam Khater, Freddie Mac’s chief economist, explains, “Despite this week’s uptick in mortgage rates, the housing market remains on the upswing with improvement in construction and home sales. While there has been a material weakness in manufacturing and consistent trade uncertainty, other economic trends like employment and homebuilder sentiment are encouraging.”
According to the National Association of Home Builders, builder confidence jumped to its highest levels in almost 18 months this week. On top of this, construction on single-family homes is up for the fourth month in a row.
“The second half of 2019 has seen steady gains in single-family construction, and this is mirrored by the gradual uptick in builder sentiment over the past few months,” said Robert Dietz, NAHB’s chief economist.
Though Dietz says builders are still being cautious due to economic concerns, single-family construction should continue its upswing in the near term.
That’s good news considering the growing interest in new homes. Data from MBA shows new home purchase applications are up 34% over the year. And according to Joel Kan, associate vice president of economic and industry forecasting for the group, low mortgage rates should keep this increased interest afloat.
“Purchase applications this year for new and existing homes for sale have consistently outpaced year-ago levels,” Kan said. “This trend should continue in the final months of the year, especially considering how much higher rates were at the end of 2018.
Forecasts have mortgage rates staying well under 4% for the foreseeable future. Some experts even predict average rates as low as 3.4% by 2020.