The average rate for a 15-year fixed-rate mortgage fell to 2.38 percent this week, just one basis point above its all-time record low of 2.37 percent.
Since the start of the coronavirus pandemic, mortgage rates have fallen and stayed down, offering borrowers a chance for savings even as the rest of the economic landscape looked bleak.
This trend of low rates has made 15-year mortgages more attractive — and affordable — than ever for homebuyers and owners. Historically, 15-year mortgages have been unaffordable for many, because their high monthly payments offset their lower interest rates. While a 15-year loan can save borrowers significantly compared to a 30-year mortgage when it comes to interest, the shorter repayment period means higher monthly payments, which can put a squeeze on household budgets. These historically low rates, however, make the payments more affordable.
Some lenders have reported clients who refinanced 30-year mortgages into 15-year loans and were able to keep their monthly payments the same. Others have said applications for 15-year mortgages spiked during the pandemic.
Now is a great time to get one of these shorter-term mortgages if you can. Rates are likely to start rising again later this year, and when they do, 15-year loans may again become unaffordable for many borrowers.
On the bright side, many experts think rates will stay stable, at least in the near term. So, you have a little bit of time to get your documentation in order if you’re considering a 15-year mortgage.
“Long-term mortgage rates will, again, remain virtually unchanged for this coming week,” said Ken H. Johnson, a real estate economist at Florida Atlantic University. “Ten-year Treasury yields continue to hover between 1 percent and 1.2 percent, while 30-year mortgage rates hold steady slightly below 3 percent. This pattern should hold until Congress agrees on the next stimulus package and it is signed by the president.”