Mortgage rates are now at the highest level of the year, and could go even higher

Even with rates higher, however, mortgage applications to purchase a home rose 5% last week compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index.Rates hit their highest level in a few decades last October, causing home sales to grind to a halt. Builders jumped to buy down rates for their customers and managed to do better than existing home sellers.

Rates then fell through mid-January to the mid-6% range and held there into February, causing a surge in home sales. But then they began rising again. "By mid-February, a pick-up in inflation reset expectations, putting mortgage rates back on an upward trend, and more recent data and comments from Fed Chair Powell have only underscored inflation concerns," said Danielle Hale, chief economist for Realtor.com. "Sales data over the next few months is likely to reflect the impact of now-higher mortgage rates.

"Despite these higher rates, application activity picked up, possibly as some borrowers decided to act in case rates continue to rise," said Joel Kan, MBA's chief economist.now than there was a year ago, it is still at a very low level historically. That has caused homes to move faster as the competition increases. Anyone waiting for rates to drop significantly may be waiting for a while.

"Recent economic data shows that the economy and job market remain strong, which is likely to keep mortgage rates at these elevated levels for the near future," said Bob Broeksmit, MBA's president and CEO.

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