Mortgage rates are at or very close to record lows this week, according to a popular survey, but time may be running short for borrowers looking to take advantage of the cheapest rates ever seen.
A new fee is looming, and rates are expected to surge this fall as lenders pass the cost along to consumers. One expert says it’s unlikely mortgage rates will return to their all-time lows anytime soon.
Mortgage rates hold steady
Rates on 30-year mortgages are little changed this week.
Mortgage rates have ticked up just slightly to an average 2.87% for a 30-year fixed-rate loan, from last week’s record-low 2.86%, mortgage company Freddie Mac said on Thursday.
30-year fixed-rate mortgages were averaging 3.73%” data-reactid=”60″>The nearly half-century-old survey has seen new all-time lows nine times in 2020. One year ago, 30-year fixed-rate mortgages were averaging 3.73%
The Federal Reserve has helped create the climate for this year’s unbelievable mortgage rates, and the Fed on Wednesday wrapped up a two-day policy meeting by pledging to keep a key interest rate near zero — possibly through the end of 2023.
Ultra-low interest rates have had the real estate market booming this summer.” data-reactid=”62″>Ultra-low interest rates have had the real estate market booming this summer.
“Despite the recession, the very low mortgage environment has spurred many first-time homebuyers to jump into the real estate market,” said Sam Khater, Freddie Mac’s Chief Economist.
The rates are “stoking demand” for homes, agrees George Ratiu, senior economist at Realtor.com. “Home prices are now over 11% higher than a year ago and available inventory is evaporating.”
Beyond 30-year mortgages, rates on other popular types of home loans have dipped this week.
refinance loans, and the rates are down sharply from last year, when the average was 3.21%.” data-reactid=”66″>The average for a 15-year fixed-rate mortgage has fallen again, to another new low — from 2.37% last week to just 2.35% now. Fifteen-year mortgages are often used for refinance loans, and the rates are down sharply from last year, when the average was 3.21%.
Rates on 5/1 adjustable-rate mortgages, or ARMs, are being offered at rates averaging 2.96%, down from last week’s 3.11%.
Record-low rates may soon be gone
Before long, all-time-low mortgage rates may be off in the distance.
Experts say borrowers should start shopping around now to lock in at a low rate to refinance or buy a home, because a new 0.5% fee on refi loans goes into effect Dec. 1. At least some lenders are expected to pass it on to consumers by raising mortgage rates across the board.
Rates already jumped in reaction to the controversial new fee when it was originally slated to start Sept. 1. But a federal regulatory agency delayed it by three months — and rates dipped back down.
Though the Freddie Mac data may not suggest this, the nearing fee may already be pushing mortgage rates higher again.
A survey of lenders from Mortgage News Daily shows 30-year fixed mortgage rates jumped this week — from an average 2.88% on Monday to 3.03% on Tuesday.
“A recent wave of borrower demand has extended the turnaround time on loans for many lenders, leading some to apply the price adjustment sooner than they may have previously anticipated,” says Matthew Speakman, an economist with Zillow.
“Unless there is an unforeseen alteration or further delay of the program, it’s unlikely that mortgage rates will revert to the long-term low levels anytime soon,” Speakman says.
homeowners insurance.” data-reactid=”99″>If rates rise quickly, borrowers will need to look for savings elsewhere, like by comparison shopping for a lower price on homeowners insurance.
get five rate quotes save an average of $3,000 more than those who get only one, a Freddie Mac study found.” data-reactid=”100″>And, shopping around is essential for finding the best mortgage rates, because they can vary widely from one lender to another. Borrowers who get five rate quotes save an average of $3,000 more than those who get only one, a Freddie Mac study found.
