If you've been wanting to buy a home or refinance, don't assume you've already lost out on super-low mortgage rates.
Though rates recently jumped to their highest levels since November, this week they've backed down a bit — so any concerns about skyrocketing rates were just false alarms, a popular survey indicates.
That means homebuyers will still find cheap loans, and homeowners can continue to refinance and mow down their monthly payments.
Rates cool off
Mortgage rates have fallen to an average 2.77% for a 30-year fixed-rate loan, from last week’s 2.79%, mortgage giant Freddie Mac said on Thursday.
Rates have eased, after taking a big jump last week. “We’re now seeing rates fluctuate a bit as political and economic factors drive Treasury yields higher," says Sam Khater, Freddie Mac's chief economist.
Mortgage rates often piggyback off the interest on Treasury bonds; those yields have been rising on expectations that the new Biden administration will boost federal spending — and federal borrowing.
Even after the recent gyrations, rates on 30-year loans remain sharply lower than a year ago, when the average was way up at 3.60%.
If you're a borrower determined to get the lowest rate possible (and that should be every borrower), experts say the key is to gather and compare multiple rate quotes. You can save thousands of dollars if you review at least five mortgage offers, instead of settling on the first one you see, Freddie Mac research has found.
Where do rates go from here?
Though borrowers shouldn't procrastinate and try to "time the market" to wait for lower mortgage rates, we're not likely to see rates take off, Khater says.
"We forecast rates to remain relatively low this year as the Federal Reserve keeps interest rates anchored near zero for a longer period of time, if needed, until the economy rebounds," he says. Freddie Mac last week released a forecast looking for 30-year mortgage rates to average 2.9% throughout 2021.
Rates will be held down not only by the Fed but also by uncertainty over the pandemic, the economy, and whether there will be additional government relief, says Zillow economist Matthew Speakman.
"It appears that fears of an extended, more substantial spike in rates have diminished — at least for now," Speakman says.
Other mortgage rates this week
Borrowers are finding lower rates this week on 15-year mortgages, which are a popular option for refinancing. They've slipped to an average 2.21%, from 2.23% last week.
A year ago, 15-year fixed-rate mortgages were averaging 3.04%, Freddie Mac says.
Rates have slid this week on 5/1 adjustable-rate mortgages, or ARMs, which are level for five years and then can adjust up — or down — each year.
ARMs are currently being offered at an average initial rate of 2.80%, down from last week's 3.12%. Last year at this time, the ARM starter rates were at 3.28%, on average.
Finding a low rate isn't the only way to cut your housing costs. A little comparison shopping can help you get a better deal on your homeowners insurance that could save you hundreds of dollars a year.