Mortgage rates are higher — but hardly 'high'

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Mortgage rates have risen just slightly this week.

Mortgage rates have gone up for a second straight week and are averaging 2.99% for a 30-year fixed-rate loan, mortgage company Freddie Mac reported on Thursday.

Rates have climbed from last week's average of 2.96%, but they're not much higher than two weeks ago, when they averaged just 2.88%. That was a record low for the Freddie Mac survey, which has been monitoring mortgage rates since 1971.

And, mortgages are still pretty cheap compared to last year at this time, when 30-year loans were more than a half-point higher at an average 3.55%. The rates in the survey come with an average 0.8 point.

The new fee that's helped push rates higher is being imposed Sept. 1 by Freddie Mac and Fannie Mae, two government-sponsored mortgage giants that buy or back most home loans issued in the U.S.

The companies say they need to start charging a 0.5% "adverse market refinance fee" because of higher risks and costs stemming from the COVID-19 pandemic.

The Mortgage Bankers Association strongly opposes the new surcharge, saying it will increase costs by about $1,400 for the average borrower.

Rates still look appealing to homeowners, homebuyers

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Homebuyers and homeowners are still finding great rates.

All-time-low mortgage rates have made 2020 a massive year for refinancing, as homeowners have found they can chop down their monthly payments and their total interest costs.

Even with the slight bump-up in rates, research from mortgage data firm Black Knight indicates 15.6 million homeowners still have an opportunity to lower their mortgage rate by at least three-quarters of 1 percentage point (say, from 3.75% to 3%) and shrink their housing costs by an average $289 a month.

Today's reduced rates also are a huge gift to homebuyers and are helping real estate markets recover from their coronavirus slump, says George Ratiu, senior economist with

"Demand for homes is surging, with buyers driving activity in suburban markets, as well as second home and vacation destinations," Ratiu says.

If you're thinking this might be your summer to buy a home, or if you're a homeowner who needs to stop procrastinating and refinance, don't be fazed by the slight increases in average mortgage rates. Thirty-year loans are still being advertised as low as 1.99%.

But landing a great rate takes some good old-fashioned shopping around. Experts recommend that you get loan offers from at least five lenders and compare them, to find the best mortgage rate in your area.

Hunting for a rock-bottom rate is worth the trouble. A Freddie Mac study found people who get five rate quotes pay lifetime costs averaging $3,000 less than borrowers who stop after hearing from just one lender.

Comparison shopping is really smart when you're buying or renewing your homeowners insurance, too. Go online and check prices from several insurers so you'll be certain you're getting the right coverage at the lowest cost.

What other mortgage rates are doing

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Other mortgage rates are higher this week.

The new Freddie Mac survey shows rates on other popular types of mortgages also have moved higher this week.

The average for a 15-year fixed-rate mortgage has jumped to 2.54%, from 2.46% last week. Fifteen-year mortgages are a popular choice for refinance loans, and the rates are way lower than they were at this time in 2019, when the average was 3.03%.

Rates on 5/1 adjustable-rate mortgages, or "ARMS," have inched upward. The rates on those loans are fixed for five years, then can adjust up or down every year, depending on what other interest rates are doing.

ARMs are currently being offered at starter rates of 2.91%, on average — versus last week's 2.90%.

At this time in 2019, the typical initial rate on a 5/1 ARM was 3.32%.

Take a look at today's top mortgage rates where you are:

About the Author

Doug Whiteman

Doug Whiteman


Doug Whiteman is the editor-in-chief of MoneyWise. He has been quoted by The Wall Street Journal, USA Today and and has been interviewed on Fox Business, CBS Radio and the syndicated TV show "First Business."

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