Mortgage rates have plummeted to an incredible all-time low in a new survey, and another shows rates that remain close to a record low.
As the coronavirus destroyed the US economy and rocked financial markets, mortgage rates have gone to places experts never expected to see, and have saved borrowers trucks of money in the process.
“At current mortgage rates, for 30 years, a home buyer will pay interest equal to 49% of their original balance. At the beginning of last year, that figure was 83%,” says Dan Green, founder and CEO of the mortgage lender. Homebuyer. .
Can rates dip further? Experts say it could happen.
Mortgage rates remain historic
That is still well below last year at this time, when rates averaged 3.75%. Survey rates come with an average of 0.8 points.
“Psychologically, mortgage rates below 3% are a big problem. Financially, they are a big problem,” says Green.
Borrowers can now get a typical home loan that costs $ 125 less per month than a mortgage at last year’s rates, Realtor.com reported.
More than 16 million homeowners can refinance, lower their rates by at least three-quarters of a point (perhaps 3.75% to 3%), and save an average of $ 283 a month, according to a study by the mortgage data firm. Black Knight.
Can the rates go down? Maybe, but don’t wait
Mortgage rates have plummeted as COVID-19 has prompted nervous investors to switch money to Treasury bills, which are considered a safe haven in uncertain times. The growing demand for bonds has raised their prices and destroyed their interest rates, which has set the pace for mortgage rates.
Bond rates, or yields, had fallen much faster than mortgage rates, but now the two have caught up and are moving more in sync. So “mortgage rates have more or less exhausted their ability to go down,” says Matthew Graham, chief operating officer of Mortgage News Daily.
But Mark Fleming, chief economist at title insurance and real estate services firm First American, says rates could drop to 2.8% or even lower.
“There is a floor there, probably around 2.5%. We are just not going to go far below that because people are paid for credit risk and other things outside of that mortgage rate,” Fleming told Yahoo Finance.
Negative Federal Reserve interest rates could push mortgage rates much, much lower, but the Fed has said it will not go there.
So for now, there’s a chance that today’s staggeringly low mortgage rates may improve a bit, but experts say you don’t feel if you’re thinking about buying a home or refinancing.
“There is no rush to block today’s rates, but there is no reason to wait either. Take the opportunity in front of you,” says Green, of Homebuyer.
That means getting mortgage rate quotes from multiple lenders and comparing them to find the best deal you qualify for.
Other mortgage rates this week
The new Freddie Mac survey, released Thursday, shows that rates on other popular types of mortgages have increased this week.
The average 15-year fixed-rate mortgage increased to 2.54%, from 2.48% last week. Fifteen-year mortgages are a popular choice for refinance loans and are much cheaper than last year at the time, when the average was 3.18%.
The 5/1 Adjustable Rate Mortgage Rates, or “ARMS,” are highest for the third consecutive week. Those loans have fixed rates for five years and can then be adjusted up or down each year, following the course of a reference interest rate such as the prime rate.
ARMs are currently being offered at starting rates averaging 3.09%, slightly more than 3.06% last week. Right now in 2019, the typical initial rate on those mortgages was 3.47%.
Once you are satisfied with your mortgage, pay attention to your homeowners insurance. Are you paying a lot? Go online and compare home insurance quotes to get the right coverage at the best possible price.
