Mortgage rates dip deeper below 3% and open wider window to refinance savings

Mortgage rates dip deeper below 3% and open wider window to refinance savings

Down. Up. Down. Up. Aaand go back down.

US mortgage rates have rebounded from week to week, but here’s the important part: Despite all the swings, the US standard mortgage average has avoided climbing above 3% for almost two months.

Popular survey shows rates have fallen a little deeper into the 2, which not only helps homebuyers but also homeowners, who can refinance and save hundreds on their monthly payments.

30-year mortgages

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The average interest rate on a 30-year fixed-rate mortgage – the most popular home loan in the United States – fell to 2.96% last week, from 2.99% a week earlier, reported mortgage giant Freddie Mac Thursday.

Rates are up from an all-time January low of 2.65%, but they are still among the lowest in history. A year ago, the 30-year fixed rate averaged 3.21%.

Mortgage rates are likely to stay low for a while, says Danielle Hale, chief economist at She says that while mortgage rates tend to rise and fall with the economy – and many indicators point to a strengthening labor market – employment is still far from its prepandemic peak.

“As long as this is the case, mortgage rates are expected to be around 3%,” Hale said.

15-year mortgages

The average rate on a 15-year fixed-rate mortgage slipped to 2.23% last week, according to Freddie Mac’s long-running survey. This is down from 2.27% the previous week and 2.62% last year at the same time.

These short term loans are popular among refinancing homeowners who can afford higher monthly payments and want to lower their lifetime interest costs.

With inflation accelerating as the economy rebounds, borrowing money for a house today is a smart bet, says Michael Greiner, assistant professor of management at Oakland University in the suburbs. of Detroit.

“Few people pay cash for their house. As a result, the real cost of a house is the amount paid plus interest. If the interest rate is lower, you are essentially buying your home for a lower price, ”Greiner told MoneyWise.

5/1 adjustable rate mortgages

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The typical rate on a 5/1 variable rate mortgage fell to 2.55% last week, from 2.64% the week before and 3.1% a year ago around the same time.

ARMs usually start with lower rates than their fixed rate cousins, but after a while the rates can “adjust” up or down, depending on the prime rate or d ‘another point of reference.

These loans are called ARM 5/1 because they are fixed for the first five years and then adjusted every (one) year thereafter.

14M could benefit from refinancing

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With the 30-year average mortgage rate still below 3%, millions of homeowners have the potential to save thousands of dollars and increase their monthly cash flow by refinancing, according to a recent report.

An estimated 14.1 mortgage holders in the United States now have the opportunity to save an average of $ 287 per month by refinancing, according to mortgage technology and data provider Black Knight. About 1.7 million could save over $ 500 per month by a refi.

You are considered a good candidate for refinancing if you have accumulated at least 20% of the equity in your home and could reduce your interest rate by at least three-quarters of a percentage point (0.75). current with a new 30-year mortgage. , says Black Knight.

It is also helpful to have a credit score of 720 or better. If you haven’t checked yours in a while, it’s easy to check your credit score for free.

How to find the lowest mortgage rate

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Low mortgage rates are also benefiting homebuyers, who have had to contend with soaring home prices.

“There is still time to take advantage of low rates,” Hale said. “However, with few options selling out quickly and record asking prices, the number of buyers applying for mortgages has declined in recent weeks. “

If you’re determined to find the lowest mortgage rate possible, studies by Freddie Mac and others have shown that comparing five or more mortgage offers from different lenders can result in significant savings.

While you’re training your muscles when it comes to price comparison, look for the best home insurance rate as well. You could easily pay too much.

And note that when you apply for a mortgage loan, lenders will want to have a solid history of on-time payments for all of your debts. If you have multiple high interest loans, consider consolidating them into one low interest debt consolidation loan to pay off your balances faster and at a lower cost.

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