Mortgages with a term of 30 years
According to the long-term research of mortgage giant Freddie Mac30-year fixed-rate mortgages averaged 2.98% last week, up just a hair from last week’s 2.97%.
Despite the increase, rates are lower than last year at the moment, when 30-year loans averaged 3.23%. About two years ago, the average was 4.20%.
“With interest rates below 3%, refinancing remains attractive to many borrowers who financed before 2020,” said Sam Khater, Freddie Mac’s chief economist.
With millions of borrowers still eligible for a refi, the low rates should spark a new wave of mortgage activity, experts say.
Black Knight, a mortgage technology and data provider, says 13 million mortgage holders can save an average of $ 283 each month by refinancing to one of the today’s historically low rates.
Mortgages with a term of 15 years
The average interest rate on a 15-year fixed-rate mortgage – a popular choice for this refinance loans – rose to 2.31% last week, according to Freddie Mac’s 50-year poll, up from 2.29% a week earlier and 2.77% a year ago.
Aside from refinancing, loans with a term of 15 years can make sense for borrowers who can make higher monthly payments. The reward is much lower interest cost over the lifetime.
5/1 adjustable rate mortgages
Rates on 5/1 variable rate mortgages averaged 2.64% last week in the Freddie Mac survey, down from 2.83% the week before and 3.14% last year at this time.
Floating rate loans typically start at lower interest rates than fixed rate mortgages, but after a period of years the interest rates ‘adjust’, meaning they go up or down in sync with the highest rate or some other measure.
The primary interest rate moves with the Federal Funds rate, a major interest rate controlled by the Federal Reserve. The Fed last week decided to keep Federal Funds interest rates close to zero, where it has been since the early days of the pandemic more than a year ago.
Low rates help when buying a home
Mortgage rates below 3% yield savings for homebuyers and homeowners.
“The housing markets welcome interest rates below 3% as a counterbalance to record high prices,” said George Ratiu, senior economist at Realtor.com. “For many first-time buyers who have been looking for a home for more than a year, low rates hold the promise of buying a home this spring.”
Potential home buyers who have not pulled the trigger on a purchase due to rising home prices and a lack of supply in the market may soon find themselves having more options.
A recent Realtor.com Survey found that 1 in 10 homeowners plan to list their property in the coming months.
How to Find the Lowest Mortgage Rate
Experts say borrowers should act quickly as the low mortgage rates probably won’t last.
“With a slew of economic reports on the horizon – including data on consumer spending and inflation – the relatively subdued mortgage interest rate activity of the past few weeks may turn into bigger moves,” warns Matthew Speakman, an economist at Zillow.
To get a cheap rate before they’re gone, you need a solid credit score. If you haven’t checked in in a while, it’s easy to do these days watch your credit score for free.
You should also shop around to find savings. Studies have shown that getting mortgage offers from multiple lenders – at least five – works wonders finding the lowest interest rate available.
Comparative shopping also helps lower your other living expenses, including what you pay for homeowners insurance. Collect quotes from multiple insurers when it’s time to renew your policy, and you may find a lower price for the coverage you already have.