Mortgage rates near 4-year high

NEW YORK — U.S. mortgage rates hit highs not seen since July 2002 last week, on the eve of the spring buying season, according to a survey of lenders published Wednesday by an industry group.

The rise in rates may limit how much money some home buyers can borrow and could force some sellers to reduce prices.

“As rates go up it definitely affects homebuyer affordability,” said Robert Moulton, a Manhasset, N.Y.-based broker who is head of Americana Mortgage Group. “It will affect more of the first-time home buyer market and will slow down anyone trying to trade up.”

Rates for 30-year mortgages, the most commonly used home loan, rose to 6.42 percent last week, according the Mortgage Bankers Association. The industry trade group surveyed 18 lenders, representing half of all loan applications received by lenders who work directly with consumers.

That 6.42 percent is a high not seen since July 5, 2002 when the 30-year mortgage rate was at 6.46 percent.

Fifteen-year mortgage rates rose to 6.06 percent last week, a level not seen since June 7, 2002.

Also, rates for adjustable rate mortgages — a popular loan for first-time buyers — have risen sharply in recent months. Last week they hit 5.64 percent — slightly lower from the March 3 week — but close to levels last seen in December 2001.

The rise in borrowing costs, amid a series of Federal Reserve interest rate hikes, could not come at a worse time for the housing industry which has many new and previously owned homes for sale.

Also, the spring season is typically the busiest time of the year for home sales because many families look to buy a home then move into it during the summer before the school year begins.

Rates for mortgages have climbed steadily in recent weeks amid signs of strength in the U.S. economy — most notably the February employment report and signs of resilience in manufacturing and service industries.

The higher borrowing costs for home buyers have already nipped at demand. Requests for home loan applications — while little changed in recent weeks — are down 20 percent from last year at this time.