Though the Federal Reserve just cut interest rates, a survey shows U.S. mortgage rates have moved higher for the third week in a row. That's something not seen since the spring.
And as rates rise, mortgage applications have leveled off, apparently because some borrowers are waiting to see if rates head lower again.
"This is very risky, because mortgage rates typically move down slowly but they rise very rapidly," says Alan Rosenbaum, CEO and founder of the New York-based mortgage lender GuardHill Financial Corp.
So if you're shopping for a home or are considering refinancing an existing mortgage, you may want to grab an attractive mortgage rate when you see one — because they could go even higher in the near term.
This week's numbers
Rates on 30-year fixed-rate mortgages have risen to an average 3.78% this week, from 3.75% last week, mortgage giant Freddie Mac said Thursday.
"This week marks the third consecutive week of rate increases, which hasn’t happened since April of this year," says Sam Khater, Freddie Mac's chief economist.
The benchmark mortgage rate is at its highest level since mid-July. The loans in the Freddie Mac survey come with an average 0.5 point.
But here's an important point: Today's rates continue to offer big savings compared to last year at this time, when 30-year mortgages were more than a full percentage point higher — averaging 4.83%.
Use this calculator to see the kind of monthly payment you can expect from today's low mortgage rates:
Not too late to refinance
If you took out a home loan even just last year, you might still be able to lower your monthly payment dramatically by doing a refinance into a new loan at a lower rate.
"We believe that it is always best to refinance when you can realize a financial benefit," says Rosenbaum, of GuardHill Financial.
Homeowners who went the refinance route during the spring of this year are now saving an average of about $140 a month, or $1,700 per year, Freddie Mac said recently.
Refinances are up a sharp 134% year over year, the Mortgage Bankers Association says. In other words, lenders are receiving more than twice as many refi applications as they were getting during October 2018.
But refinance applications slipped 1% last week, compared to a week earlier.
The outlook for mortgage rates
Applications for loans to buy homes rose 2% last week, the mortgage bankers say.
"Purchase activity continues to show strength, indicating obvious homebuyer demand,” Freddie Mac's Khater says. “However, the lack of housing supply remains a major barrier to not just the housing market, but the overall economic recovery.”
Low mortgage rates have helped heat up demand for homes, squeezing the inventory of houses available for sale and putting pressure on home prices.
The market for houses is likely to stay strong because mortgage rates are expected to remain attractive.
For the remainder of 2019, Freddie Mac is forecasting an average 30-year mortgage rate of just 3.7%. The prediction for next year is that rates will increase just slightly, to an average 3.8%.
This week's other mortgage rates
Beyond 30-year mortgages, rates on other types of home loans also have kept pushing higher this week.
The average for a 15-year mortgage has edged up to 3.19%, from 3.18% last week.
Those shorter-term home loans are a popular pick for refinance loans. Last year at this time, 15-year fixed-rate mortgages were averaging a steeper 4.23%, Freddie Mac says.
And, rates have gone up again for 5/1 adjustable-rate mortgages, or ARMs, which are level for five years and then can adjust up — or down — each year.
ARMs are currently being offered at an average initial rate of 3.43%, up from an even 3.4% last week. One year ago, the ARM starter rates were averaging 4.04%.