Mortgage rates edge up a bit, underscoring refi urgency

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 Mortgage rates rose slightly this week, creating a sense of urgency for homeowners who have yet to take advantage of the opportunity to refinance their home loans.

The average cost of a 30-year fixed-rate mortgage ticked up to 3.33 percent from last week’s 3.31 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 up to 2.62 percent from last week’s 2.57 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 0.32 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 been rising. With Democrats taking control of the White House and Congress, a generous stimulus bill has been enacted — and more government spending could be coming.

“With Friday’s employment report expected to be a strong report and President Biden expected to announce a large infrastructure spending package that will likely include additional deficit spending, I see no other way for rates to go except higher,” says Michael Becker, branch manager at Sierra Pacific Mortgage.

Mortgage experts polled by Bankrate are divided about where rates will go in the coming week, with 46 percent expecting rates to rise and 38 percent predicting rates to stay the same.

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