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After climbing in the spring, mortgage rates are back to where they were in February, according to a long-standing survey. And that means borrowers are once again able to take out loans at rates that are at or near their lowest.
Mortgage rates have plunged as the current outbreak of COVID in the United States has rocked investors and made them less confident about the economic recovery.
The drop also accompanied the end of unpopular refinancing fees – a move that saved homeowners new loans even more.
Mortgage rates at their lowest for 6 months
Low mortgage rates have once again broken their record.
When rates rose a few months ago, some experts said 30-year fixed rate mortgages were heading towards an average of 4%. But this summer, rates moved in the opposite direction.
This week, the 30-year fixed rate fell to 2.77% on average, mortgage giant Freddie Mac reported Thursday. That’s the lowest in nearly six months, and it’s down from 2.80% last week.
Current rates aren’t too far off the early January average of 2.65%, which was the lowest on record in Freddie Mac’s 50-year weekly survey.
The survey rates are accompanied by an average of 0.6 point. A year ago, borrowers took down 30-year fixed-rate mortgages with higher rates, averaging 2.88%.
Mortgage rates reflect investor concerns over the course of the pandemic, says Sam Khater, chief economist at Freddie Mac.
“With the global market uncertainty surrounding the delta variant of COVID-19, we have seen 10-year Treasury yields decline and, as a result, mortgage rates have followed suit,” Khater said. “This bodes well for those still looking to refinance, renovate or even buy a new home. “
Goodbye refi fees, hello lower rates
Another reason rates have come down is that last weekend marked the final farewell to fees that had added 0.5% to the cost of a refinance since late 2020.
Many lenders had passed the surcharge on to consumers through increases in mortgage rates, ranging from one-eighth to one-quarter of a percentage point (0.125-0.25), according to an analysis by the Mortgage News Daily.
Refinancing cost the typical homeowner an additional $ 1,400 in fees, the Mortgage Bankers Association said.
Regulators first announced the fees almost a year ago to help Freddie Mac and Fannie Mae weather the pandemic. The two government-sponsored companies buy most of the US home loans from lenders, and officials said the companies were facing losses of at least $ 6 billion from COVID-related defaults and foreclosures. -19.
In mid-July, the Federal Housing Finance Agency announced that “adverse market charges” were no longer necessary and would be removed as of August 1.
“Eliminating unfavorable refinancing fees from the market will help families take advantage of the low interest rate environment to save more money,” said FHFA Acting Director Sandra L. Thompson.
Other mortgage rates this week
Prices are down all the way this week.
Rates for other popular mortgage types are mixed this week, says Freddie Mac.
The average for a 15 year fixed rate mortgage held steady at 2.10%, a historic low for a loan often chosen for refinancing.
Shorter-term mortgages are much cheaper than a year ago, when 15-year mortgages averaged 2.44%.
And, the rates on 5/1 adjustable rate mortgages have slipped this week. These loans are called “ARMs” and have rates that are fixed for five years, then can be adjusted up or down each year, following the same path with a benchmark interest rate, such as the prime rate.
ARMs are currently offered at initial rates averaging 2.40, up from 2.45% last week. Around the same time last year, the typical starting rate for these mortgages was 2.90%.
Where do mortgage rates go from here?
Rates have been following the ups and downs of the U.S. coronavirus saga for over a year, and it will continue, says Matthew Speakman, economist at Zillow.
“A sharp rise in mortgage rates seems unlikely until we have better control of COVID,” Speakman said.
But if the past few months have reminded us of anything, it’s that mortgage rates can be unpredictable. If you see a good rate, and you’re among the majority of US homeowners who have never refinanced in the past year, you’ll be smart to grab it – and don’t expect something better to happen.
A refi can save you a lot of money. A study released Monday by mortgage data and technology company Black Knight found that 15.1 million current homeowners who have yet to refinance can save an average of $ 298 per month by taking out new home loans.
Start your refinancing journey by checking your credit score, which you can easily do for free. The best mortgage rates tend to be offered to borrowers with the highest scores, so you may need to work on your credit score before you start contacting lenders.
Then shop around by collecting refi offers from at least five lenders. Studies by Freddie Mac and others have shown that revising the rates of five or more lenders can save thousands of dollars over the life of your loan.
Don’t be discouraged if you determine that refinancing won’t work for you, as there are other ways to lower the cost of home ownership. When it comes to buying or renewing home insurance, a little comparison between policies could save you hundreds of dollars a year.
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
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