The average rate on a 15-year fixed mortgage fell to 2.37 percent in Bankrate’s most recently weekly survey. This revisits an all-time low for the 15-year, previously reached in late December.
Since the start of the coronavirus pandemic, mortgage rates have tumbled, which has driven a wave of refinancing and encouraged a rush of home purchases around the country.
For many buyers, the low rates have made 15-year mortgages more affordable than ever. These shorter-term loans pack some big benefits for borrowers. Thanks to lower rates compared to longer-term loans, and a shorter repayment period, homeowners stand to save significantly with a 15-year mortgage. On a $300,000 loan, it can amount to about $100,000 in savings over the life of the loan.
The downside, however, is higher monthly payments. Because you have to pay off your principle in half the time, 15-year loans tend to be more expensive in the short term than 30-year ones.
Homeowners with a 30-year mortgage who haven’t refinanced recently, however, may be able to keep their monthly payments roughly the same if they refinance to a shorter loan term, so that opportunity is worth exploring.
Uncertainty around the coronavirus situation and president Biden’s stimulus policies mean these record-low rates are likely to stick around at least a little bit longer.
“Unless some headline on the vaccine is better or worse than what is trending already, we shouldn’t see too much movement,” said Logan Mohtashami, a housing analyst at HousingWire in Irvine, California. “Over time as we vaccinate more people and the economy is on better footing, yields should rise. However, we still have a long way to go to get most of the county vaccinated.”