Mortgage rates fell again this week, a retreat that creates an opportunity for homeowners who have yet to refinance their home loans.
The average cost of a 30-year fixed-rate mortgage ticked down to 3.27 percent from last week’s 3.32 percent, according to Bankrate’s national survey of lenders. Rates reached a record low of 2.93 percent in January. The 15-year fixed rose, edging up to 2.57 percent from last week’s 2.56 percent.
Bankrate includes origination points and other fees in its figure. The 30-year fixed-rate loans in this week’s survey included an average total of 0.3 discount and origination points.
The retreat in rates underscores the reality that millions of American homeowners still could benefit from refinancing.
“For whatever reason, there are a lot of people who haven’t refinanced,” says Brian Smith, mortgage advisor at Union Home Mortgage. “Some people need to hear the refinance message one time and they take action. Some people need to hear the message 10 times, or 20 times, and then they act. And some people wait until the opportunity is almost gone.”
Mortgage rates plummeted after the coronavirus recession struck in the spring of 2020, a trend that helped drive the surprisingly strong housing market. The upward trend in mortgage rates reflects signals of an economic turnaround.
“As the economy continues to improve, we expect conditions to remain generally favorable for the housing and mortgage market,” Sam Khater, Freddie Mac’s chief economist said lasgt week. “Higher mortgage rates have the potential, however, to dampen the robust demand we’ve been experiencing.”
Meanwhile, home prices have risen robustly during the pandemic, and rock-bottom mortgage rates helped push home values higher. For homebuyers, and especially first-time buyers, rising prices pose an affordability challenge.
In one sign the rates will continue to rise, the 10-year Treasury yield, a key indicator for mortgage rates, has more than doubled in recent months. With Democrats taking control of the White House and Congress, a generous stimulus bill has been enacted — and more government spending could be coming.
“Perhaps bond markets are beginning to think the rise in inflation and inflation expectations are more transitory than permanent,” says Michael Becker of Sierra Pacific Mortgage. “For the short term, it looks like a top on rates is in.”
Mortgage experts polled by Bankrate are divided about where rates will go in the coming week, with 57 percent expecting rates to stay the same.