Mortgage charges inch up — this can be the final name on getting a sub-3% fee
Mortgage rates are rising – this could be the last call to hit an interest rate below 3%
US mortgage rates have been largely below 3% for the past two months, but Americans who hope rates stay in this extremely low zone don’t like what they see later this year.
Unemployment has fallen, inflation has risen, and more Americans are being vaccinated – all factors that point to a healthier economy and higher mortgage rates are on the way.
According to a closely followed survey, prices are rising. If it’s your first time getting into the housing market or looking to refinance your home that you’ve owned for years, you may be short of time to get your hands on a dirt cheap mortgage rate.
30 year mortgage
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The interest rate on America’s most popular home loan – the 30-year fixed-rate mortgage – averaged 2.99% last week, down from 2.95% the previous week, mortgage giant Freddie Mac reported Thursday.
Despite the slight increase, the rates in the long-term survey remain well below the average of 3.18% of the previous year.
But in his latest quarterly forecast, Freddie Mac said the 30-year rate will average 3.4% through the fourth quarter of this year. A few tenths of a percentage point might not seem like much, but when you are planning a mortgage payment – along with all of your other household expenses – the difference will be noticeable.
While interest rates are still affordable, double-digit house price gains over the past 10 months have pushed the national median list price to a new record high of $ 380,000, says George Ratiu, senior economist at Realtor.com. That means a monthly mortgage payment of nearly $ 160 more than in 2020.
Many homeowners have decided that it makes more financial sense to refinance their mortgage rather than buying another home. At current mortgage rates, 14.1 million homeowners still have an opportunity to save an average of $ 287 per month by refinancing, mortgage technology and data provider Black Knight recently said.
15 year mortgage
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The average rate on a 15-year fixed-rate mortgage was unchanged last week at 2.27%, according to Freddie Mac’s long-standing survey. A year ago, the 15-year rate averaged 2.62%.
The story goes on
Short term loans are popular with refinancing homeowners who can afford higher monthly payments or who want to lower their lifelong interest costs.
Sam Khater, Freddie Mac’s chief economist and longtime interest rate watcher, says persistently low interest rates make refinancing a “worth considering” option.
However, competition is fierce for buyers.
“Real estate prices continue to rise, while the inventory remains low and new homes cannot be built quickly enough,” says Khater. “There are many potential homebuyers looking to take advantage of low mortgage rates, but the competition is fierce.”
5/1 adjustable rate mortgages
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The average rate on 5/1 variable rate mortgages, or ARMs, was 2.64% last week, down from the previous week when the average was 2.59%, says Freddie Mac. A year ago, these ARMs averaged 3.10%.
Floating rate loans typically start at lower rates than their fixed rate counterparts, but after a period of time, rates may “adjust” up or down according to the prime rate or some other benchmark.
These mortgages are called 5/1 ARMs because the interest rates are fixed for the first five years and then adjusted every (one) year.
Find the lowest price out there
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With the typical 30-year fixed-rate mortgage still below 3% – if only by a hair’s breadth – this could be your last and greatest chance to get some killer interest to brag about to your friends.
Remember that the best interest rates go to borrowers with the highest creditworthiness. Nowadays, if you haven’t checked in in a while, it’s easy to get a look at your credit score for free.
Comparative purchases work wonders to find the lowest available mortgage rate in your area and for someone with your creditworthiness. Studies by Freddie Mac and others have found that borrowers who seek loan offers from at least five different lenders generally save thousands over time.
While you’re at it, don’t miss out on other ways to cut your housing costs. Whenever you purchase or renew your homeowners insurance, seek quotes from multiple insurers to ensure you are getting the best price for the coverage you need.