If you spot an attractive mortgage rate that could offer you substantial savings, lock that rate while you have the chance.
Mortgage rates are just a hair from their all-time low
Mortgage rates have plummeted, and the benchmark 30-year fixed mortgage rate is averaging 3.33% for the week ending April 2, mortgage giant Freddie Mac reported on Thursday. That's just a couple of notches above 3.29%, last month's all-time low in the nearly 50-year old Freddie Mac survey.
Rates are down from last week's average of 3.50%. One year ago, the typical rate on 30-year fixed-rate mortgages was 4.08%.
The rates in the survey come with an average 0.7 point.
"Mortgage rates have drifted down for two weeks in a row, and that drop reflects improvements in market liquidity and sentiment," says Sam Khater, the chief economist at Freddie Mac.
The Federal Reserve has been taking steps to help stabilize the mortgage market. The central bank announced last week that it would buy up unlimited amounts of Treasury bonds and mortgage-backed securities; that campaign has helped push mortgage rates to their current low levels.
The Fed also cut a key short-term interest rate to near zero, which has created a climate for lower rates in general.
Current average mortgage rates
|Loan Type||Interest Rate|
|30-year fixed-rate mortgage||3.26%|
|15-year fixed-rate mortgage||2.73%|
|5/1 adjustable-rate mortgage||3.17%|
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The potential benefits for homeowners
When rates took their historic plunge early last month, the data firm Black Knight estimated that 12.8 million U.S. homeowners could save an average $277 per month by refinancing into a new 30-year mortgage.
More recently, LendingTree chief economist Tendayi Kapfidze estimated that this year's ultra-low mortgage rates could save consumers $60 a month for every $100,000 borrowed, compared to mortgages taken out a year ago when rates were higher.
Many homeowners have been getting the message. Applications for refinance loans soared 26% last week, the Mortgage Bankers Association says.
Meanwhile, as Americans hunker down to fight the coronavirus pandemic, house shopping has largely stalled.
"Homebuyer demand has declined in response to current economic conditions," says Khater. "The good news is that the pending economic stimulus is on the way and will provide support for both consumers and businesses."
A $2 trillion relief package signed last week in Washington includes cash payments of up to $1,200 for most Americans, generous unemployment benefits, and financial assistance for small and large businesses.
Thinking about a refinance? Use the mortgage calculator below to see how much you might save with one of today's sunken mortgage rates.
Other mortgage rates this week
Rates on other popular types of mortgage loans are mixed this week.
The average for a 15-year fixed-rate mortgage has dropped to 2.82%, according to Freddie Mac. Last week, the typical rate for those loans — which are a popular option for refinancing — was 2.92%. One year ago, 15-year fixed home loans were averaging 3.56%.
Rates on 5/1 adjustable-rate mortgages have gone up for a third week in a row. Those "ARMs" are fixed for five years and then can adjust up or down every year that follows.
ARMs are currently being offered at an initial rate of 3.40%, up from 3.34% last week. A year ago at this time, the starter rates on those loans stood at 3.66%, on average.