Rates for home loans jumped in step with yields in the bond market even as fresh reminders of familiar headwinds stalked the housing market.
The 30-year fixed-rate mortgage averaged 4.65% in the Sept. 20 week, according to Freddie Mac’s weekly survey . That was up five basis points during the week, and marked the fourth straight weekly gain. The 15-year fixed-rate mortgage averaged 4.11%, also up five basis points. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.92%, down from 3.93%.
Mortgage rates track alongside the benchmark 10-year U.S. Treasury note yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y 0.00% , which roared to a four-month high as trade war fears eased and Federal Reserve officials doubled down on their intentions to raise interest rates.
The popular 30-year fixed-rate mortgage is also at a four-month high, and while a few basis points wouldn’t dampen demand for home financing in a healthy market, current market conditions look vulnerable.
Builders broke ground on more homes in the most recent month, but applied for far fewer permits — a sign that construction activity may soon start to decline. Sales of previously-owned homes are 1.2% lower in the year to date than in the same period last year, just months after finally regaining a post-crisis high.
If rates are really on the rise now after several years of false starts, they could be an additional headwind. At current average rates, a monthly payment on a median-priced home, assuming a 20% down payment, would cost about $82 more per month than when paying the 3.99% full-year average rate from last year, according to Zillow’s mortgage calculator .
There is outsize demand for homes, if they’re available — but that’s a big “if.” And with more and more signals that the current economic cycle is entering its final innings, housing is starting to look like a bellwether, not an outlier, say some analysts.