Mortgage rates fell this week, a drop that further opens the window for homeowners who have yet to refinance their home loans.
The average cost of a 30-year fixed-rate mortgage fell to 3.16% from 3.20% last week, according to Bankrate’s national survey of lenders. Rates hit a record high of 2.93 percent in January. The 15-year fixed-rate mortgage remained at 2.47 percent, unchanged from last week.
And adjustable rate mortgages also fell, making this type of loan more attractive. The discount rate includes origin points and other charges in its figure. The 30-year fixed rate loans in this week’s survey included an average total of 0.3 discount and origination points.
This is the fifth consecutive week of rate cuts in the Bankrate survey. The rate reversal provides an opportunity for millions of US homeowners who could still benefit from refinancing.
“The most important thing most households can do to take advantage of low interest rates is for homeowners to refinance their mortgages,” said Greg McBride, chief financial analyst at Bankrate. “Significantly reducing monthly payments can create a path to speed up debt repayment or leeway to increase savings. “
Mortgage rates fell after the coronavirus recession hit in the spring of 2020, a trend that helped boost the surprisingly strong housing market. The upward trend of mortgage rates reflects signals of an economic recovery.
However, COVID-19 remains a threat to much of the world, a reality that has created clouds over the global economic outlook, says Logan Mohtashami, housing analyst at HousingWire. “We are getting closer and closer to being able to walk the earth freely here in America, but that is not the case in other countries,” he says.
Meanwhile, home prices have risen sharply during the pandemic, and lower mortgage rates have helped drive home values up. For home buyers, and especially first-time buyers, rising prices pose an affordability challenge.
A sign that rates could resume their rise, the 10-year Treasury yield, a key indicator of mortgage rates, has more than doubled in recent months. With Democrats taking control of the White House and Congress, a generous stimulus bill has been enacted – and more government spending may be on the way.
Mortgage experts interviewed by Bankrate remain divided on the direction of rates over the coming week.