U.S. Mortgage Rates Little Changed, With 30-Year at 4.4%

Mortgage rates in the U.S. were little changed as homebuyers began adjusting to borrowing costs that have increased from near-record lows.

The average rate for a 30-year fixed mortgage rose to 4.4 percent in the week ended today from 4.39 percent, McLean, Virginia-based Freddie Mac said in a statement. The average 15-year rate held at 3.43 percent.

Mortgage rates are stabilizing after climbing to a two-year high last month on speculation the Federal Reserve may begin paring its bond purchases. While higher borrowing costs have slowed refinancing, the effects on home prices and sales haven’t been seen yet, according to Paul Diggle, property economist at Capital Economics Ltd. in London.

“This is not a terrible thing,” Diggle said in a telephone interview today. Higher rates are “obviously a factor for new borrowers, but a lot of existing borrowers are going to be sitting pretty on their 30-year fixed rates they had over the past few years.”

The 30-year rate has climbed from a near-record low of 3.35 percent in early May. It’s below the average of about 5.3 percent for the past 10 years, data compiled by Bloomberg show.

Americans are more optimistic about housing, even with higher rates, according to a July survey released yesterday by Fannie Mae. Sixty-two percent of respondents said they believe mortgage rates will go up over the next year, the biggest share in the monthly poll’s three-year history. At the same time, 74 percent said it’s a good time to buy a house, up from 72 percent in June. Respondents said they expect home prices to climb 3.9 percent on average in the next 12 months.

‘In Stride’

“Consumers have taken the interest rate rise in stride,” Doug Duncan, chief economist at Washington-based Fannie Mae, said in a statement. “These results are consistent with our own analysis of previous housing cycles, which finds that interest rates and home prices are not strongly correlated.”

President Barack Obama called for Congress to pass legislation that expands Americans’ access to mortgage financing so housing can continue to heal.

Even as interest rates have ticked up, “the housing market has continued to be fairly robust,” he said yesterday during a question-and-answer session in Los Angeles moderated by Spencer Rascoff, chief executive officer of Zillow Inc. “You’ve still seen some good, steady growth, but I think that all of us recognize that it is still a soft housing market.”

The Mortgage Bankers Association’s index of home-loan applications rose for the first time in eight weeks, increasing 0.2 percent in the period ended Aug. 2. The purchase measure gained 0.7 percent, while the refinance gauge dropped 0.1 percent, the Washington-based trade group reported yesterday.

Before it's here, it's on the Bloomberg Terminal.