The news won't come as a shock to those currently in the market to buy a house and calculating their monthly expenses—mortgage rates have reached a 12-year high. CNN puts the rate on a 30-year fixed mortgage at 5.11% for the week ending Thursday, the highest since a mark of 5.21% in April 2010. Nobody is calling this a peak, either. Rates have been rising quickly—the 30-year figure is up 5% from the previous week and up from 2.97% a year ago—and moves by the Federal Reserve are expected to keep them rising as the central bank tries to curb inflation.
“While springtime is typically the busiest home buying season, the upswing in rates has caused some volatility in demand,” says Freddie Mac economist Sam Khater. CNBC reports that mortgage applications are falling quickly—total volume is down 5% last week from the previous week and down about half from this time a year ago. It's a sign the red-hot housing market is finally cooling. Just how painful is the rise in mortgage rates to would-be buyers? The Wall Street Journal calculates that someone buying a $400,000 house with a 20% down payment can expect to pay about $500 more a month compared to a year ago. (Read more mortgage rates stories.)