Mortgage rates are little changed this week. And while persistently low rates mean buyers can score a great mortgage deal, inventory shortages are showing no signs of easing up and are weighing on mortgage applications.
With fewer new homes being built and even fewer existing homes for sale, home shoppers are finding higher prices and fewer choices.
New-home building sputters
Low mortgage rates are a win for homeowners looking to refinance at a lower rate and can ease some of the home-price shock for buyers.
But the challenging supply of homes is keeping some homebuyers sidelined, and a new report doesn't offer them much hope.
The government says starts on new homes fell 4.8 percent from June to July. Building permits and new-home completions also tumbled, signaling an overall slowdown in the new-construction market.
Mortgage applications have been slow, edging up just 0.1 percent last week, according to the Mortgage Bankers Association.
What will the Fed do?
The Federal Reserve has been helping to keep interest rates low and remains in watch-and-wait mode. Although U.S. job growth continues its winning streak, inflation is failing to hit the Fed's 2 percent target, according to the minutes of the central bank's July policy meeting.
And that's making central bankers skittish, says Mark Hamrick, Bankrate senior economic analyst.
"It stands in the way of their long-term hope to boost interest rates and get on with the business of shrinking the $4 trillion balance sheet" of bonds, Hamrick says.
The Fed's September meeting is expected to bring details of how the central bank will reduce its bond holdings, which is likely to push up long-term interest rates, like mortgage rates.
Mortgage rates inch up
The benchmark 30-year fixed-rate mortgage rose this week to 4.05 percent from 4.04 percent, according to Bankrate's weekly survey of large lenders. A year ago, it was 3.56 percent. Four weeks ago, the rate was 4.11 percent. The 30-year fixed-rate average for this week is 0.39 percentage points below the 52-week high of 4.44 percent, and is 0.51 percentage points above the 52-week low of 3.54 percent.
The 30-year fixed mortgages in this week's survey had an average total of 0.22 discount and origination points.
Over the past 52 weeks, the 30-year fixed has averaged 4.05 percent. This week's rate is 0.00 percentage points the same as the 52-week average.
- The 15-year fixed-rate mortgage was flat at 3.27 percent.
- The 5/1 adjustable-rate mortgage was flat at 3.49 percent.
- The 30-year fixed-rate jumbo mortgage rose to 4.07 percent from 4.03 percent.
At the current 30-year fixed rate, you'll pay $480.30 each month for every $100,000 you borrow, up from $479.72 last week.
At the current 15-year fixed rate, you'll pay $703.64 each month for every $100,000 you borrow, unchanged from last week.
At the current 5/1 ARM rate, you'll pay $448.49 each month for every $100,000 you borrow, unchanged from last week.
Weekly national mortgage survey
|This week's rate:||4.05%||3.27%||3.49%|
|Change from last week:||+0.01||N/C||N/C|
|Change from last week:||+$0.96||N/C||N/C|