Mortgage rates rise, but finding a home is the bigger challenge

Three people being shown an open house | Jay Laprete/Bloomberg via Getty Images

Mortgage rates have risen slightly for the second straight week, but getting a loan while rates are still low may be the least of a homebuyer's worries.

It may be difficult just finding something to buy.

A jammed-up housing market

New numbers from the National Association of Realtors show the lack of available homes in the market is driving down home sales even as potential buyers pile up thanks to the strong economy.

Normally, three solid months of declining home sales around the height of the buying season would be good news for buyers. Sales go down, inventories go up and -- bam! -- you're in a buyer's market. Big houses! Low prices! Woohoo!

Unfortunately, sales are down not because there aren't enough buyers, but because there aren't enough homes to buy.

The NAR's Pending Home Sales Index fell to 108.5 in May, from 109.4 in April, a figure that was itself revised downward. The index is down 1.7 percent from a year ago.

"Buyer interest is solid, but there is just not enough supply to satisfy demand," says Lawrence Yun, NAR chief economist. "Prospective buyers are being sidelined by both limited choices and home prices that are climbing too fast."

The effect is particularly pronounced if you're looking to buy a less expensive home. NAR says sales of homes under $100,000 were down 7.2 percent in May, compared to a year earlier, even as the sales of homes at the top of the market have soared.

Just a little patience

If you're struggling to find a home that will work for you in today's market, the best thing may be to stay patient. There's no reason to rush into a home purchase that's going to permanently break your budget or put you in a house that doesn't meet your needs.

With mortgage rates still off their 2017 highs and not showing evidence they'll move substantially higher anytime soon, the best thing may be to wait until the right home comes up. (But it certainly doesn't hurt to shop rates now and get preapproved for a mortgage.)

Mortgage rates higher

The benchmark 30-year fixed-rate mortgage rose this week to 4.07 percent from 4.05 percent, according to Bankrate's weekly survey of large lenders. A year ago, it was 3.61 percent. Four weeks ago, the rate was 4.09 percent. The 30-year fixed-rate average for this week is 0.37 percentage points below the 52-week high of 4.44 percent, and is 0.55 percentage points greater than the 52-week low of 3.52 percent.

The 30-year fixed mortgages in this week's survey had an average total of 0.17 discount and origination points.

Over the past 52 weeks, the 30-year fixed has averaged 3.98 percent. This week's rate is 0.09 percentage points higher than the 52-week average.

  • The 15-year fixed-rate mortgage rose to 3.31 percent from 3.27 percent.
  • The 5/1 adjustable-rate mortgage rose to 3.52 percent from 3.47 percent.
  • The 30-year fixed-rate jumbo mortgage rose to 4.01 percent from 4.00 percent.

At the current 30-year fixed rate, you'll pay $481.46 for every $100,000 you borrow, up from $480.30 last week.

At the current 15-year fixed rate, you'll pay $705.59 for every $100,000 you borrow, up from $703.64 last week.

At the current 5/1 ARM rate, you'll pay $450.16 for every $100,000 you borrow, up from $447.37 last week.

Weekly national mortgage survey

Results of's weekly national survey of large lenders conducted June 28, 2017 and the effect on monthly payments for a $165,000 loan:

30-year fixed15-year fixed5-year ARM
This week's rate:4.07%3.31%3.52%
Change from last week:+0.02+0.04+0.05
Monthly payment:$794.41$1,164.22$742.77
Change from last week:+$1.91+$3.21+$4.61


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