According to the long-running survey by mortgage giant Freddie Mac, 30-year fixed-rate mortgages averaged 2.98% last week, up just a hair from the previous week's 2.97%.
Despite the increase, rates are lower than they were last year at this time, when 30-year loans were averaging 3.23%. About two years ago, the average was 4.20%.
“With rates under 3%, refinancing continues to be attractive for many borrowers who financed before 2020," says Sam Khater, Freddie Mac’s chief economist.
With millions of borrowers still eligible for a refi, according to experts, the low rates should be kicking off a new wave of mortgage activity.
Black Knight, a mortgage technology and data provider, says 13 million mortgage holders stand to save an average $283 each month by refinancing to one of today’s historically low rates.
The average rate on a 15-year fixed-rate mortgage — a popular choice for refinance loans — rose last week to 2.31%, Freddie Mac’s 50-year-old survey shows, up from 2.29% a week earlier and 2.77% a year ago.
Aside from refinancing, 15-year loans can make sense for borrowers who are able to make higher monthly payments. The reward is much lower lifetime interest costs.
5/1 adjustable-rate mortgages
Rates on 5/1 adjustable-rate mortgages last week were averaging 2.64% in the Freddie Mac survey, down from 2.83% the previous week and 3.14% at this time last year.
Adjustable-rate loans typically start out with lower rates than fixed-rate mortgages, but after a period of years the rates "adjust" — meaning they move up or down in sync with the prime rate or some other benchmark.
The prime rate moves along with the federal funds rate, a key interest rate that's controlled by the Federal Reserve. The Fed last week decided to hold the federal funds rate close to zero, where it has stood since the early days of the pandemic over a year ago.
Low rates help with homebuying
The return of sub-3% mortgage rates is providing savings for homebuyers, as well as homeowners.
“Housing markets are welcoming sub-3% interest rates as a counterbalance to record-high prices,” says Realtor.com senior economist George Ratiu. "For many first-time buyers who have spent more than a year looking for a home, low rates hold out the promise that they will be able to purchase a house this spring."
Prospective homebuyers who haven’t pulled the trigger on a purchase because of rising home prices and a lack of supply in the market may soon find they have more options.
A recent Realtor.com survey found 1 in 10 homeowners plans to list their property in the coming months.
How to find the lowest mortgage rates
Experts say borrowers should act swiftly, because the low mortgage rates aren't likely to last.
“With a slew of economic reports on the horizon — including consumer spending and inflation data — the relatively muted mortgage rate activity from the past couple weeks may transition to more significant movements," warns Matthew Speakman, an economist with Zillow.
To land a cheap rate before they're gone, you'll need a solid credit score. If you haven’t checked in a while, it’s easy these days to peek at your credit score for free.
Also, you'll need to shop around to find savings. Studies have shown that getting mortgage offers from multiple lenders — at least five — works wonders in finding the lowest available interest rate.
Comparison shopping also helps with cutting your other housing costs, including what you pay for homeowners insurance. Gather quotes from multiple insurers when it’s time to renew your policy, and you might discover a lower price for the coverage you already have.