Spring Has Sprung for Mortgage Rates

With the home-selling season about to begin, a new headwind —higher mortgage rates— has emerged. In the past week, the average 30-year mortgage tracked by Bankrate.com is 0.15 percentage point higher, adding nearly 1.8% to a typical monthly payment. Our Zillow mortgage calculator for 30 year loans on the right is springing from its low of 3.67%, barely two weeks ago, to the 4% mark. Government-sponsored mortgage giants Fannie Mae and Freddie Mac are also raising their charges to guarantee mortgages, adding to costs.

Higher rates will have come too recently to be reflected in the latest mortgage applications data. But they could pressure prices and sales. Happily, the basic supply-and-demand picture for builders is good—and getting better. In the six years through 2006, single-family housing starts averaged 1.49 million.