Mortgage rates pull back, prolonging refi opportunity

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Mortgage rates fell slightly 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 3.32 percent from last week’s 3.33 percent, according to Bankrate’s national survey of lenders. Rates reached a record low of 2.93 percent last month. The 15-year fixed also dipped, edging down to 2.56 percent from last week’s 2.62 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 0.34 discount and origination points.


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.

“Rates were really low because our economy was really bad because of the pandemic,” says Melissa Cohn, executive mortgage banker at William Raveis Mortgage. “Hundreds of thousands of people have died. Millions of people were out of work. But the good news is the economy is starting to get better. That’s all good for the world, but it does mean rates are starting to go up.”

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.

“While a modest improvement in rates is possible, it could be short lived,” says Elizabeth Rose, sales manager at AmCap Mortgage in Dallas.

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.

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Written by
Jeff Ostrowski
Senior mortgage reporter
Jeff Ostrowski covers mortgages and the housing market. Before joining Bankrate in 2020, he wrote about real estate and the economy for the Palm Beach Post and the South Florida Business Journal.
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