Mortgage rates hang close to record lows and offer more dirt-cheap deals
Mortgage rates are near record lows and offer dirt cheap deals
Mortgage rates remain near record lows this week, meaning significant savings for borrowers, according to a popular poll.
Interest rates have hit an all-time low eleven times since the pandemic began in March and are now almost a full percentage point below the previous year's level.
According to experts, the low interest rate climate gives home buyers immense purchasing power and contributes to record-breaking home sales.
Historically low interest rates also attract a fury of refinance requests as homeowners see the opportunity to lower their monthly mortgage payments and lower their lifelong interest costs.
Record lows hang around
Dmitry Naumov / Shutterstock
Mortgage rates have risen only marginally, averaging 2.81% for a 30-year fixed rate loan, compared to last week's record low of 2.80%, mortgage company Freddie Mac said Thursday.
Interest rates are an impressive 97 basis points lower than a year ago when the average was 3.78%.
"The record low mortgage rate environment offers the economy noticeable support at a critical time as residential construction continues to drive growth," said Sam Khater, Freddie Mac's chief economist.
According to Danielle Hale, Chief Economist at Realtor.com, this was "an integral part" of the record pace of home sales. Demand is driving property prices up sharply, but low interest rates have deterred some buyers from being priced out of the market.
"For context, today's mid-list home buyer is paying about $ 20 less per month than the previous year buyer, even though that home is $ 35,000 more," says Hale.
Interest rates on other popular mortgages also held steady this week, according to Freddie Mac's survey. The average for a 15-year fixed-rate mortgage has dropped from 2.33% last week to an all-time low of 2.32%. These mortgages, which are widely used to refinance loans, remain in a different orbit than last year when the average was 3.19%.
The interest rates on adjustable rate 5/1 mortgages (ARMs) averaged 2.88%, slightly above last week's 2.87%, but still well below last week's 3.43%.
Refinancing remains very attractive
Tijana Simic / Shutterstock
With interest rates this low, refinancing is booming. The Mortgage Bankers Association announced this week that the number of refi requests has increased 80% over the past year.
"Many consumers are smart about the ability to cut their monthly payments, which means they can spend, save or pay off more debt than in the past," added Freddie Mac's Kan.
Homeowners who are hesitant should set the best interest rates while they can, as an in-depth mortgage refinancing fee could increase the refi rates.
Freddie Mac and Fannie Mae - the state-sponsored mortgage giants who buy most of the U.S. home loans from lenders - say COVID-19 forced them to take the fee to offset their pandemic-related losses. Some lenders have already increased their interest rates to pass the 0.5% surcharge on to consumers.
An estimated 19.3 million mortgage holders could cut their interest rates enough to reduce their monthly payments by an average of $ 299 per month, mortgage data company Black Knight recently reported.
You get an extremely low mortgage rate when you shop. Borrowers who receive five interest rates save an average of $ 3,000 more than those who receive just one offer, a study by Freddie Mac found.
If you wait too long and miss the record lows, savings will have to be made elsewhere. This may mean making additional comparative purchases to ensure you are paying the lowest possible price for your homeowner insurance.
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