Mortgage rates rise above 3% again and experts say they will rise even higher

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Mortgage rates have risen above 3% again, and experts say they will rise even higher.

Mortgage rates rise above 3% again and experts say they will rise even higher

Mortgage rates simply served as a wake-up call for Americans who were postponing refinancing, perhaps because they assumed rates would remain low indefinitely.

They won’t. In fact, the country’s mortgage base rate has just climbed above 3% for the first time in two months.

Analysts warn that rates are likely to continue to rise as the economy improves and inflation rises. Thus, homeowners may not have enough time to capture low interest rates on mortgages this will reduce their housing costs.

But the rates are still very low by historical standards.

30 year mortgage

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The average rate on America’s most popular mortgage – a 30-year fixed-rate mortgage – jumped to 3.02% last week from 2.93% the previous week, mortgage giant Freddie Mac reported on Thursday… A year ago, the average was 3.13%.

“Mortgage rates have surpassed 3% for the first time in 10 weeks,” said Sam Hather, chief economist at Freddie Mac. “As the economy develops and inflation remains high, we expect rates to continue to gradually rise in the second half of the year.”

According to the latest forecast by Freddie Mac, by the fourth quarter of 2021, rates will average 3.4%.

“For those homeowners who have not yet refinanced — and there are many borrowers who could benefit from it — now is the time,” says Hather.

When 30-year rates previously averaged 3.02%, Black Knight announced in early March that 12.9 million homeowners could refinance and cut their monthly payments. hundreds of dollars

Mortgage for 15 years

Rates on 15-year fixed-rate mortgages last week rose to an average of 2.34% from 2.24% a week earlier, Freddie Mac said. A year ago, the average rate over 15 years was 2.59%.

Short term loans are popular with refinancing homeowners who can afford higher monthly payments or want to cut their lifetime interest expenses.

“Interest rates stay low and seductive – refinancing of a mortgage loan brought a solid profit [last] week – however, prices for new and old houses rose by 18% and 24%. [respectively] shoppers have fizzled out since last year, ”says George Ratiu, senior economist at Realtor.com.

According to the latest weekly report by the Mortgage Bankers Association, Refi loan applications grew 3% week on week, while demand for home loans rose just 1%.

5/1 Adjustable Rate Mortgage

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The average rate on 5/1 adjustable rate mortgages, or ARM, was 2.53% last week in a Freddie Mac study, up slightly from 2.52% the previous week. A year ago, ARM averaged 3.08%.

Adjustable rate loans usually start at lower interest rates than their fixed rate counterparts, but over a period of time, rates can “adjust” up or down according to basic rate or some other test.

Mortgages are called 5/1 ARM because interest rates are fixed for the first five years and then adjusted every (one) year thereafter.

How to find low mortgage rates while they are

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Given that the typical 30-year fixed rate mortgage is still pretty close to 3%, this might be the last, best chance for homeowners to get killer refinancing rates that will make them the envy of their friends and neighbors.

According to Black Knight, you’re a good refi candidate if:

  • You have a 30-year mortgage with an interest rate that you can reduce by at least three-quarters of a 1 percentage point through refinancing – say, from 3.75% to 3%.

  • You have a good to exceptional credit rating of at least 720. If you haven’t looked at your rating in a while, it’s easy to get today. see your credit score for free

  • You have at least 20% of the equity in your home, which means that the balance on your mortgage is no more than 80% of the home’s current market value.

Comparison shopping is good for find the lowest mortgage rate available in your area for someone with your credit score. Research by Freddie Mac and others has shown that if you take the time to compare the rates of at least five lenders, you will save thousands of dollars over the life of the loan.

Shopping can also help lower other homeownership costs. When it comes time to buy or renew homeowners insurance, collect quotes from several insurers to find out the best price for the coverage you need.

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