If you’re shopping for a new home or are looking to refinance your current mortgage, you can score a bargain rate or a lower monthly payment.

But these low rates won’t last forever, so you should consider locking one in if you don’t want to risk dropping the ball.

Record-low mortgage rates for the end of January

Falling mortgage rates
Andrii Yalanskyi / Shutterstock

For the second week in a row mortgage rates have plummeted, with 30-year fixed-rate mortgages now averaging 3.51%, down from 3.6% a week ago, Freddie Mac reported on Thursday.

A year ago at this time, 30-year fixed mortgages were almost a full percentage point higher, at an average 4.46%.

These rock-bottom rates are the lowest for late January in the 49-year history of Freddie Mac’s Primary Mortgage Market Survey, according to a MoneyWise.com finding that Freddie Mac has confirmed.

Rates haven't been this low since September, when 30-year mortgage rates nosedived to an average 3.49%, which was a three-year low.

If rates keep dropping, they'll close in on the all-time low of 3.31% from November 2012.

Use the calculator below if you’re curious about how much you could save on your monthly house payment with one of these record-low rates.

How global events are affecting mortgage rates

Nurse with vial
SamaraHeisz5 / Shutterstock

One of the main reasons mortgage rates are down is the continuing spread of the deadly coronavirus in China.

The World Health Organization declared a global health emergency on Thursday, and anxious investors have been pulling their money out of stocks and pouring it into Treasury bonds.

This increased demand for Treasury bonds has caused their prices to rise and their yields (interest rates) to drop — and mortgage rates have been falling right along with them.

Those low rates are boosting demand for both mortgages and homes, and the housing market stands in stark contrast to the condition it was in last winter.

“At the end of 2018, the real estate community was very concerned that Federal Reserve policy would drive the 30-year fixed from 4.5% to over 5%,” says Corey Burr, senior vice president with Sotheby's International Realty in Chevy Chase, Maryland.

“Thankfully, the Fed reversed course at the beginning of 2019, and the rate on the 30-year fixed has dropped about 1% since,” Burr says. “This has greatly increased the purchasing power of buyers and injected much confidence into the real estate market.”

Fed policymakers cut interest rates three consecutive times during the second half of last year but decided to hold rates steady during their recent January meeting.

Mortgage and refinance applications surge

During the week ending Jan. 24 the Mortgage Bankers Association saw mortgage applications jump 7.2%, and in December sales of previously owned homes increased by 3.6%, according to the National Association of Realtors.

The low rates have grabbed the attention of homeowners as well as homebuyers — refinance loan applications soared by 8% at the end of January, up an astounding 146% from this time last year.

If you’re a homeowner, you may be able to save through a refi even if you picked up your current mortgage as recently as 2018.

You can compare refinance offers from multiple banks by visiting LendingTree.

The outlook for mortgage rates and housing

The current historically-low mortgage rates are expected to remain steady for the foreseeable future.

Corporate mortgage giant Fannie Mae recently predicted that 30-year fixed-rate mortgages would average 3.7% throughout both 2020 and 2021.

In 2019, the average for the benchmark mortgage was 3.9%.

Other mortgage rates this week

The rates on 15-year fixed-rate mortgages — a popular choice for refinancing — inched down to an average 3%, from 3.04% in the week ending Jan. 24.

This time last year, 15-year mortgages were averaging 3.89%, according to Freddie Mac.

Rates on 5/1 adjustable-rate mortgages also fell during the past the week. Those loans — known as ARMs — are fixed for five years, after which they can adjust up or down each year depending on the market.

ARMs are currently being offered at an average initial rate of 3.24%, down slightly from last week's 3.28%. A year ago, the starter rates on ARMs were averaging a stiffer 3.96%.

About the Author

Shane Murphy

Shane Murphy

Staff Writer

Shane is a staff writer for MoneyWise. He holds a bachelor’s degree in English Language & Literature from Western University and is an alumnus of the Algonquin College Scriptwriting program.