Mortgage rates hit highest level since November, pushing monthly payment for a typical home close to $3,000

By Aarthi Swaminathan

The 30-year mortgage rate surges by 22 basis points

Mortgage rates surged on the back of expectations that the Federal Reserve will hold off on cutting interest rates in the near term.

Mortgage rates went up for the third week in a row, rising to their highest level since November 2023.

The 30-year fixed-rate mortgage averaged 7.1% as of April 18, according to data released by Freddie Mac (FMCC) on Thursday.

That's up 22 basis points from the previous week. One basis point is equal to one hundredth of a percentage point.

A year ago, the 30-year rate was averaging 6.88%.

The average rate on the 15-year mortgage as of April 18 was 6.39%, up from 6.16% last week. It was at 5.76% a year ago.

Freddie Mac's weekly report on mortgage rates is based on thousands of applications received from lenders across the country that are submitted to Freddie Mac when a borrower applies for a mortgage.

Separate data from Mortgage News Daily said that the 30-year fixed-rate mortgage was averaging 7.41% as of Thursday afternoon. The Mortgage Bankers Association's survey found that the 30-year rat e was 7.13% as of April 12.

For a typical listed home, which had a median price of $424,900 in March, according to Realtor.com, a 30-year mortgage rate of 7.1% would translate to a monthly mortgage payment of principal and interest of $2,858. That's assuming a buyer puts down 20% and the payment and includes property taxes and home insurance.

Realtor.com is operated by News Corp subsidiary Move Inc. MarketWatch publisher Dow Jones is also a subsidiary of News Corp.

A rate of 7.1% would then loosely translate into a buyer needing to earn a gross income of $114,319, assuming they are spending 30% on housing, the company said.

What Freddie Mac said: "As rates trend higher, potential homebuyers are deciding whether to buy before rates rise even more or hold off in hopes of decreases later in the year," Sam Khater, chief economist at Freddie Mac, said in a statement.

"It remains unclear how many homebuyers can withstand increasing rates in the future," he added.

What are economists saying? Home prices continue to increase even "as affordability hit an all-time low and mortgage rates have more than doubled over the past three years," Lisa Sturtevant, chief economist at Bright MLS, said in a statement.

One reason for that is the prevalence of cash buyers, who are insensitive to rates and hence can sustain price growth, she explained, along with repeat buyers with significant equity in their homes, or investors.

Cash buyers made up 28% of all sales in March, the National Association of Realtors said on Thursday.

How have high home prices and mortgage rates affected you? We want to hear from readers who have stories to share about the effects of increasing costs and a changing economy. If you'd like to share your experience, write to readerstories@marketwatch.com. A reporter may be in touch.

-Aarthi Swaminathan

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04-19-24 0928ET

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