Mortgage rates are higher for the second week in a row. But they remain a bargain compared to last year, and they'll not likely to rise much more.
The average rate on a 30-year fixed-rate mortgage has climbed to 4.12%, from last week's 4.08%, reports mortgage giant Freddie Mac.
One year ago, the benchmark mortgage rate was higher, averaging 4.42%. The loans in Freddie Mac's survey come with an average 0.5 point.
Though this month's increases in mortgage rates have been small, borrowing has cooled. Mortgage applications fell 5.6% last week, and refinance activity dropped 11%, the Mortgage Bankers Association says.
Comparison-shop to find today's best mortgage rates in your area.
Why rates are doing what they're doing
"Rates moved up slightly this week while mortgage applications decreased following last week’s jump in rates — indicating borrower sensitivity to changing mortgage rates," says Sam Khater, Freddie Mac’s chief economist.
Two weeks ago, rates took their biggest one-week drop in over 10 years after the Federal Reserve indicated it wouldn't hike interest rates any further this year because of signs of a slowing economy.
Khater says don't get the wrong idea from the more recent increases in mortgage rates. They're not really going anywhere.
"Despite the recent rise, we expect mortgage rates to remain low, in line with the low 10-year Treasury yields, boosting homebuyer demand in the next few months," he says.
Freddie Mac is forecasting an average 30-year mortgage rate this year of 4.5%, below last year's average of 4.6%.
Could this be your year to buy a home? Calculate what your monthly mortgage payment will be.
This week's other mortgage rates
Rates on 15-year mortgages are at an average 3.60% this week, up from last week's 3.56%, Freddie Mac says. A year ago, those shorter-term home loans were averaging 3.87%.
And 5/1 adjustable-rate mortgages — with rates that hold steady for five years and then can "adjust" up (or down) every year after that — are now being offered with average initial rates of 3.80%. That's a jump from last week's average of 3.66%.
At this time last year, those ARMs were offered at an average initial rate of 3.61%.
When you apply for a mortgage, you'll want to have a down payment ready. Find a good savings account to help you set that money aside.