When it seemed like mortgage rates had nowhere to go but up, they plunged. again and are now the lowest since mid-February, a long poll shows.
This is a welcome development for home buyers shocked by the price who can still use a mortgage rate below 3%. It also gives homeowners more time to potentially save thousands with refinancing with cost reduction…
But if the COVID economic recovery becomes more resilient, rates could reverse the downward trend towards the end of the summer, some experts say.
30 year mortgage
The average rate on a 30-year fixed-rate mortgage fell to 2.90% last week, the lowest in nearly five months, mortgage giant Freddie Mac said. reported on Thursday… This is below the level of the previous week of 2.98%. A year ago, a 30-year fixed income averaged 3.03%.
While the numbers are above the record low in January of 2.65%, they are still lower than ever before the COVID-19 pandemic. But with renewed economic growth and rising inflation, analysts believe that rates are unlikely to fall much below their current level – if they do fall at all.
“We expect that economic growth will gradually lead to higher interest rates, but home buyers and refinancing borrowers still have the opportunity to take advantage of the 30-year rates that are expected to be continue to fluctuate around 3%says Sam Hather, chief economist at Freddie Mac.
However, concerns about the rapidly spreading Delta variant of COVID-19 are undermining confidence in the economy. Investors are revising their once optimistic economic forecasts, says Matthew Speakman, an economist at Zillow.
“While longer-term rate changes are likely to have a positive side, the change in market forecasts suggests that rates have little reason to rise sharply in the near term,” Speakman says.
Mortgage for 15 years
Rates on 15-year mortgages – a popular option for refinancing loans – also fell last week, according to research by Freddie Mac.
The average was 2.20%, up from 2.26% a week earlier. At that time, a year ago, interest rates on 15-year loans were on average above 2.51%.
Aside from refinancing, a 15 year mortgage can make sense for a borrower who can make higher monthly payments. The remuneration is a much lower lifetime interest expense.
5/1 Adjustable Rate Mortgage
The 5/1 Adjustable Rate Mortgage (ARM) rates declined marginally to 2.52% last week, from an average of 2.54% in the previous week. A year ago, 5/1 ARM rates averaged 3.02%.
These loans initially carry lower interest rates than their 30-year fixed rate counterparts, in exchange for the risk that the borrowers take on.
With 5/1 ARM, you pay a fixed interest rate for the first five years, then the rate is “adjusted” every (one) year. Your mortgage rate may fall, which will lead to savings, or rise, which will cost you more.
Homeowner With Adjustable Rate Loan Refinances Frequently stable mortgage with a fixed interest rate when the introductory period on ARM ends.
Why rates keep falling
Mortgage rates tend to follow the direction of US Treasury bond yields – the interest rates the government pays to investors. Interest rates fell last week as Treasury yields plunged to five-month lows following news of rising unemployment and other signs that the economic recovery from the pandemic may be slowing.
The minutes from the Federal Reserve meeting in late June released last week also had an impact on mortgage rates, said Daniel Hale, chief economist at Realtor.com. The notes indicate that the central bank plans to be more patient with future interest rate hikes and other measures that will put upward pressure on borrowing costs.
“In other words, rates fell as investors realized that the latest Fed discussion might not have been as hawkish as originally thought,” says Hale.
Rates are expected to remain at 3% at least until August, she says, which is the earliest date the Fed is likely to provide a timetable to cut back purchases of mortgage-backed securities. This purchase helped lower mortgage rates.
Mortgage rates remain attractive to buyers, homeowners.
While the limited home market makes it difficult for home buyers to find housing and take advantage of low mortgage rates, an estimated 14 million homeowners can still save an average of $ 287 per month through refinancing, mortgage technology and data provider Black Knight said. …
If you are considering a refi, get take a look at your credit score for free and see if boost can be used. The most desirable mortgage rates are usually offered to homeowners with grades ranging from 720 to 850. This range assumes that you have demonstrated responsible use of the loan.
If your credit is in good shape, look for the best loan. Research by Freddie Mac and others has shown that comparison of at least five mortgage offers can lead to savings of thousands of dollars over time.
When you apply for a mortgage, lenders will want to make sure that your cash flow is stable enough so that you can afford the monthly payments. If you already have several high-interest debt, consider combining those balances into one. low interest debt consolidation loan…
If it turns out that you can’t turn over the refi, you have other ways to cut back on your homeownership costs. When you renew your homeowners insurance, get quotes from several insurers and compare them. You may just find yourself paying more than you should.