The average rate on a 15-year fixed mortgage fell six basis points this week, settling at 2.56 percent in Bankrate’s weekly survey of lenders. These lower rates are giving homebuyers a bit of a reprieve after rising last week, but the upward trend still generally seems to be in place. Interest on most mortgage products has taken two steps higher and one step lower for much of this year, and 15-year rates have been hovering around the 2.6 percent mark for about a month.
For much of 2020 and the early weeks of 2021, mortgage rates continually set new record lows as economic uncertainty reigned and central banks lowered borrowing costs. However, interest has slowly been rising through 2021, and although rates are still low by historical standards, their upward path is limiting options for prospective homeowners and refinancers.
Throughout last year, 15-year mortgages saw a surge in popularity because their super low interest rates offset higher monthly costs, making them more affordable for more borrowers than ever. As rates continue climbing, it’s likely this trend will reverse, sending more people back to the still-dominant 30-year loans.
With rates still relatively low, however, it’s definitely worth considering a 15-year mortgage if your budget will allow it. So long as you can afford the higher monthly payments, you stand to save significantly on interest over the life of the loan, thanks to both a shorter repayment period and lower interest rates.
More good news for borrowers, with mortgage rates moving up gradually, many lenders are shielding applicants by keeping their offers steady.
“Any slight uptick in rates will not show up in mortgage pricing as lenders will shave their profit margins to keep rates constant,” Jeff Lazerson, president of MortgageGrader said in Bankrate’s weekly poll of mortgage experts.