All-time lows mean more savings

Mortgage rates started a cascade of rate drops back in March with the start of the pandemic, setting new lows 17 times along the way.

The average rate for 30-year mortgages continues to hover near record lows today, now at 2.73% according to mortgage giant Freddie Mac, while 15-year fixed-rate mortgages, a popular option for refinancing, are averaging 2.20%.

Refi requests have exploded over the last year, but many homeowners are still watching from the sidelines. More than 19 million mortgage holders could save an average of $308 by refinancing today, according to the mortgage technology and data provider Black Knight.

Already refinanced once before? There’s no limit to the number of times you can replace your home loan. Just make sure your credit score is in good shape before applying again.

Rates may be on an upward trend

View of United States Capital through the trees
mrsashko / Shutterstock

After diving lower and lower in 2020, the new year saw a sudden mortgage rate spike.

Lenders will be on the lookout for signs of economic recovery before raising rates — and that may very well be underway with the COVID-19 vaccine rollout.

Meanwhile, President Joe Biden is rushing to get more stimulus money into the hands of Americans.

More spending from Washington could lead to more Treasury debt, which is a key input for interest rates, experts say.

Freddie Mac’s most recent forecast, released mid-January, sees 30-year mortgage rates nearing 3% this year — a small number compared to a year ago, but still well north of where it stands today.

Fixed beats adjustable-rate loans right now

While adjustable-rate mortgages (ARMs) traditionally trend lower than fixed-rate home loans, currently they’re neck and neck — meaning homeowners can lock in ultra-low interest rates for the duration of their loan.

This week especially, 5/1 ARMs are currently being offered at an average initial rate of 2.80%, half a percent higher than the current average 15-year fixed loan, and 0.07% higher than the average 30-year fixed-rate mortgage.

Last year at this time, the ARM starter rates were at 3.28% on average, while a 30-year fixed was hovering at 3.60%.

How to find the best refi rate

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wavebreakmedia / Shutterstock

Average rates are low, but you’ll still need to do some work to land one of those rock-bottom mortgage offers. Here are a couple ways you can score a low mortgage rate for your refinance.

Be the best borrower you can

First, take a peek at your credit score. A lender wants to feel confident you won't have any problems paying back the loan, and a very good (740 to 799) or excellent (800 or higher) credit score will help provide that assurance.

These days it’s easy to see your credit score for free, and some services will even help you monitor it so it stays high.

Shop around

You shop around when booking a hotel, right?

Research from Freddie Mac shows borrowers can save thousands of dollars by comparing at least five rate quotes, instead of just saying yes to the first offer.

Don’t forget to use those same comparison shopping skills to save money when it’s time to buy or renew your homeowners insurance. You can find the coverage you need, and still cut hundreds of dollars from the annual price.

About the Author

Ethan Rotberg

Ethan Rotberg


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.

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