After rising steadily for most of February, the average interest rate on a 15-year fixed mortgage started March down slightly. It averaged 2.49 percent in Bankrate’s latest weekly survey, three basis points lower than it was last week.
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 and refinancers, these low rates have made 15-year mortgages more affordable than ever. Rates on 15-year loans are generally lower than those on 30-year mortgages, and with less time to compound, they almost always save borrowers significant money in interest. But that comes at a cost in the form of higher monthly payments. On a $300,000 loan, a 15-year mortgage holder could save around $100,000 in interest overall compared to a 30-year loan, but the monthly payments will be hundreds of dollars more.
It’s unlikely that this slew of low rates will last much longer. Mortgage interest has been trending upward for much of the year so far, and although it will take time to reach its pre-pandemic levels, higher rates are likely to price borrowers out of shorter-term loans more quickly than they will make mortgages completely unaffordable for some.
“Rates continue their upwards trend with small teases of optimism here and there,” Jennifer Kouchis senior vice president of real estate lending at VyStar Credit Union in Jacksonville, Florida, said in Bankrate’s weekly poll of mortgage experts. “A sign of a strengthening economy and positive vaccines news is the culprit, but we know too well this could change at any moment as COVID-19 not completely in our rear window.”