Mortgage rates head back toward their record lows
Mortgage rates are lower this week, with the benchmark 30-year fixed mortgage rate averaging 3.50% in the week ending March 26, mortgage company Freddie Mac reported on Thursday. That's down from 3.65% last week, and it's lower than a year ago, when rates were averaging 4.06%.
The rates in Freddie Mac's survey come with an average 0.7 point.
Mortgage rates had been rising since the first week in March, when 30-year loans hit a record 3.29%, on average, the lowest in the nearly 50-year history of the weekly Freddie Mac survey. Now, rates are looking more attractive again.
"The Federal Reserve’s swift and significant efforts to stabilize the market were much needed and helped mortgage rates drop for the first time in three weeks," says Sam Khater, Freddie Mac’s chief economist. "The combination of the Fed’s actions and pending economic stimulus will provide substantial support to the mortgage markets."
The Fed slashed a key short-term interest rate to close to zero and announced it would buy up Treasury bonds and mortgage-backed securities, with no limit on those purchases.
Meanwhile, a bill making its way through Congress would stimulate the economy by giving Americans cash payments of up to $1,200, expanding unemployment benefits substantially, and providing financial assistance to businesses and industries.
Refinances expected to heat up again
The recent actions by the Fed "could put downward pressure on mortgage rates, allowing more homeowners the opportunity to refinance," says Joel Kan, the associate vice president of forecasting for the Mortgage Bankers Association.
The trade group reported on Wednesday that mortgage refinance applications sank 34% amid last week's higher mortgage rates. Mortgage applications overall were down 29.4% last week.
LendingTree reports that even during the recent rebound in mortgage rates, demand for refinance loans was sizzling and overwhelmed mortgage originators.
Refinance applications tripled from a year ago in each of America's 50 largest cities and in 45 out of the 50 states, according to LendingTree's data.
Refi opportunities are greatest in cities and states where average credit scores are higher and where home prices are rising more quickly, according to LendingTree's Kapfidze.
Use the mortgage calculator below to see how much you could save by refinancing at one of today's low 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 slid to 2.92%, according to Freddie Mac. Last week, the typical rate for those loans — which are a popular for refinancing — was 3.06%. A year ago, 15-year fixed home loans were averaging 3.57%.
Rates on 5/1 adjustable-rate mortgages have gone up for a second straight week. Those "ARMs" are fixed for five years and then can adjust up or down every year after that.
ARMs are currently being offered at an initial rate of 3.34%, up from 3.11% last week. A year ago at this time, the starter rates on ARMs were at 3.75%, on average.