WASHINGTON–Home sales may have shown a rebound in the most recent data, but mortgage rates continue to rise, having ticked up for the fourth straight week.
The 30-year fixed-rate mortgage averaged 4.20% during the April 25 week, according to Freddie Mac. The increase was modest, rising just three basis points over one week earlier, but it’s been a steady increase. The 15-year fixed-rate mortgage averaged 3.64%, up from 3.62%.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.77%, down one basis point, Freddie Mac reported.
Even as rates have risen, conditions in the housing market remain tight, largely due to lacking inventory. According to the Mortgage Bankers Association, mortgage applications in recent weeks have hit a nine-year high.
New FHA Scrutiny
All of that is occurring at the same time the Federal Housing Administration said recently it is planning to tighten standards and require manual underwriting for mortgages that may be riskier. The agency, which guaranteed about 23% of new mortgages in 2018, has expressed concern over borrowers who have lower credit scores in addition to higher debt-to-income ratios.
“Manual underwriting is more labor intensive and costly for lenders,” analysts at the Urban Institute stated in response. “It is too early to tell whether this will discourage lenders from originating the affected mortgages and to what degree. In the coming months, we will be monitoring the credit characteristics of new FHA originations to identify the impact of this change on credit availability.”