30-year mortgages

Dollar symbol on one hand and percentage sign on another hand, with business concepts doodles background, concept of deal and profit.
BsWei / Shutterstock

Mortgage rates are averaging 2.73% for a 30-year fixed-rate loan, unchanged from last week, mortgage giant Freddie Mac said on Thursday.

Though rates are still above last month’s record low, they’re miles below where they were a year ago, when the average was 3.45%.

15-year mortgages

Rates on other popular mortgages barely budged this week, the Freddie Mac survey shows.

The average for a 15-year fixed-rate loan has increased slightly to 2.21%, from 2.20%. Those mortgages, a favorite choice for refinancing, averaged 2.97% at this time last year.

5/1 adjustable-rate mortgages

Starter rates on 5/1 adjustable-rate mortgages, or ARMs, are averaging 2.78%, down from 2.80% last week. One year ago, the average was 3.32%.

Those loans have rates that fixed for the first five years and then can "adjust" — up or down — each (one) year.

How soon will rates pop?

Industrial engineering team wears a COVID 19 protective mask. Workers wear a quarantine mask to prevent the spread of Covid 19 by wearing a face mask. Coronavirus disease.
Sirisak_baokaew / Shutterstock

The forecasts have rates crawling higher in the months ahead, with Freddie Mac predicting mortgage rates will reach an average of nearly 3% this year.

But, the near-term outlook for rates is still a bit hazy, as “economic data and pandemic-related developments paint a conflicting picture of the economy’s path forward,” says Matthew Speakman, an economist with Zillow.

“The labor market remains deeply wounded, as concerns about new virus variants have escalated and the fate of the next wave of fiscal relief is currently in flux,” Speakman says.

But Treasury bond yields — interest rates which generally dictate the course of mortgage rates — have been rising steadily for months. And if a positive January jobs report coincides with meaningful progress on more fiscal relief, mortgage rates could rise quickly, he adds.

How to get the lowest mortgage rate available to you

Proud father holding his newborn baby daughter in the air, with smiling mother sitting on the floor at home
Flamingo Images / Shutterstock

But as long as low mortgage rates stick around, homeowners can cash in.

“While many have already refinanced, the evidence suggests that upper-income homeowners have taken advantage of the opportunity moreso than lower-income homeowners who could stand to benefit the most by lowering their monthly mortgage payment,” says Sam Khater, Freddie Mac’s chief economist.

More than 19 million mortgage holders could still save an average $308 a month by refinancing now, says mortgage technology and data provider Black Knight. Good candidates are those with a solid credit score and at least 20% equity in their homes.

If you find and compare offers from at least five different lenders, you can save thousands of dollars in interest on your mortgage, studies from Freddie Mac and others have found.

If you keep comparison shopping when it’s time to buy or renew or homeowners insurance, you may find the coverage you need at a much lower price.

About the Author

Ethan Rotberg

Ethan Rotberg

Reporter

Ethan Rotberg is a staff reporter at MoneyWise. His background includes nearly 15 years as a writer, editor, designer and communications professional. He loves storytelling, from feature writing to narrative podcasts. His work has appeared in the Toronto Star, CPA Canada and Metro, among others.

You May Also Like

Sprucing Up Your Home? Don't Decorate Without This Money-Saving Secret

This 30-second trick can save you a surprising sum on any big project.

This Online Shopping Tool Actually Rewards You for Buying Local

Here's how to save money while supporting your community at the same time.

Here's the Trick to Getting a Tricked-Out Home Office on a Budget

With remote work here to stay, it's worth investing a few bucks in your space.

Refunds Without Returns — and 5 Other Ways Online Shopping Is Getting Better

New software is finally giving consumers the advantage over big businesses.