Mortgage Rates

Mortgage charges dip deeper beneath 3% and open wider window to refinance financial savings


Mortgage rates drop below 3% and open a wider window for refinancing savings

Low. Above. Low. Above. Aa and down again.

US mortgage rates have been rising week by week, but here’s the important part: Despite all the fluctuations, the US standard mortgage average has avoided jumping above 3% for almost two months.

A popular survey shows that interest rates have just dropped a little lower than the 2 mark, which helps not only home buyers but also homeowners who can refinance and save hundreds on their monthly payments.

30 year mortgage

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The average rate on a 30-year fixed-rate mortgage – America’s most popular home loan – fell to 2.96% last week, from 2.99% a week earlier, mortgage giant Freddie Mac reported Thursday.

Interest rates are up from 2.65% January all-time low, but they are still among the lowest in history. A year ago, the 30-year festival averaged 3.21%.

Mortgage rates are likely to stay cheap for a while, says chief economist Danielle Hale. She says that while mortgage rates tend to rise and fall with the economy – and many indicators show a strengthening labor market – employment is still a long way from its pre-pandemic peak.

“As long as this is the case, mortgage rates will likely hover around 3%,” says Hale.

15 year mortgage

According to Freddie Mac’s long-standing survey, the average rate on a 15-year fixed-rate mortgage fell to 2.23% last week. That is a decrease from 2.27% in the previous week and 2.62% in the previous year.

These shorter term loans are popular with refinancing homeowners who can afford higher monthly payments and want to lower their lifelong interest costs.

With inflation accelerating as the economy recovers, borrowing money for a house is now a wise bet, says Michael Greiner, assistant professor of management at Oakland University in suburban Detroit.

“Very few people pay for their home in cash. The real cost of a home is therefore the amount paid plus interest. If the interest rate is lower, you are essentially buying your home at a lower price, ”Greiner told MoneyWise.

The story goes on

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, down from 2.64% the week before and 3.1% a year ago at that time.

ARMs usually start out with lower interest rates than their fixed rate cousins, but after a period of time interest rates can “adjust” up or down in step with the prime rate or some other benchmark.

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

14M could benefit from refinancing

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

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

You are considered a good candidate for refinancing if you have built up at least 20% equity in your home and could lower your existing interest rate by at least three quarters of a percentage point (0.75) with a new 30-year mortgage, says Schwarzer Ritter.

Having a credit score of 720 or better also helps. If you haven’t checked your creditworthiness in a while, there is an easy way to check your creditworthiness for free.

How to Find the Lowest Mortgage Rate

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Low mortgage rates also benefit home buyers struggling with skyrocketing home prices.

“There’s still time to take advantage of low interest rates,” says Hale. “However, the number of buyers applying for mortgages has declined in recent weeks due to the small number of fast-selling offers and record-high asking prices.”

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

While you let your comparison buying muscles play, you are also shopping for the best price for home insurance. You could easily overpay.

And note that when applying for a mortgage, lenders want to see a solid track record of on-time payments for all of their debts. If you have multiple high-interest loans, consider consolidating them into a single, lower-interest debt consolidation loan to get your balances off faster and more cheaply.