Mortgage rates fell again this week, a decline that further opens the window for homeowners who have yet to refinance their home loans.
The average cost of a 30-year fixed-rate mortgage ticked down to 3.16 percent from last week’s 3.20 percent, according to Bankrate’s national survey of lenders. Rates reached a record low of 2.93 percent in January. The 15-year fixed-rate mortgage remained at 2.47 percent, unchanged from last week.
And adjustable-rate mortgages fell, too, making that type of loan more compelling. 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.
It marked the fifth consecutive week that rates have fallen in Bankrate’s survey. The rate reversal offers an opportunity for millions of American homeowners who still could benefit from refinancing.
“The single biggest thing most households can do to take advantage of low interest rates is for homeowners to refinance their mortgages,” says Greg McBride, Bankrate’s chief financial analyst. “Reducing the monthly payments in a meaningful way can create a pathway to accelerate debt repayment or breathing room to boost savings.”
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.
However, COVID-19 remains a threat to much of the world, a reality that has created clouds over the global economic outlook, says Logan Mohtashami, housing analyst at HousingWire. “We are getting closer and closer to being able to walk the earth freely here in America, but this isn’t the case in other countries,” he says.
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 could resume their 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.
Mortgage experts polled by Bankrate remain divided about where rates will go in the coming week.