Mortgage rates falling, keeping the Refi window open
Mortgage rates fell slightly this week, a pullback that creates an opportunity for homeowners who have yet to refinance their home loans.
The average cost of a 30-year fixed-rate mortgage fell to 3.32% from 3.33% last week, according to Bankrate’s national survey of lenders. Rates hit a record high of 2.93% last month. The 15-year fixed rate also fell to 2.56% from 2.62% last week.
The discount rate includes origin points and other charges in its figure. The 30-year fixed rate loans in this week’s survey included an average total of 0.34 points of discount and origination.
Millions of American homeowners could still benefit from refinancing.
“For some 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 once and they take action. Some people need to hear the message 10 or 20 times and then they take action. And some people wait until the opportunity is almost lost.
Mortgage rates fell after the coronavirus recession hit in the spring of 2020, a trend that helped boost the surprisingly strong housing market. The upward trend in mortgage rates reflects signals of an economic recovery.
“The rates were really low because our economy was really bad with 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 that the economy is starting to improve. It’s good for the world, but it means the rates are starting to rise.
Meanwhile, home prices have risen sharply during the pandemic, and lower mortgage rates have helped drive home values up. For home buyers, and especially first-time buyers, rising prices pose an affordability challenge.
As a sign that rates will continue to rise, the yield on the 10-year Treasury, a key indicator of 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 may be on the way.
“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 on the direction rates will take in the coming week, with 57% expecting rates to stay the same.