Borrowing costs dropped to their second-lowest levels in three years, offering home shoppers an opportunity to lock in lower monthly mortgage payments.
The lower rates are “supporting homebuyer demand and leading to higher refinancing activity,” says Sam Khater, Freddie Mac’s chief economist. “Borrowers who take advantage of these low rates can improve their cash flow by lowering their monthly mortgage payments, giving them more money to spend or save.”
Low mortgage rates likely will stick around. The Federal Reserve on Wednesday voted to leave its benchmark rate unchanged. The Fed’s short-term rate does not have a direct effect on mortgage rates but does often influence them. “If the Fed is on hold, we are at least on hold with lower interest rates,” Greg McBride, chief financial analyst at Bankrate.com, told CNBC.
Freddie Mac reports the following national averages with mortgage rates for the week ending Jan. 30:
- 30-year fixed-rate mortgages: averaged 3.51%, with an average 0.7 point, dropping from a 3.60% last week. A year ago, 30-year rates averaged 4.46%.
- 15-year fixed-rate mortgages: averaged 3%, with an average 0.7 point, falling from last week’s 3.04% average. A year ago, 15-year rates averaged 3.89%.
- 5-year hybrid adjustable-rate mortgages: averaged 3.24%, with an average 0.3 point, falling from last week’s 3.28% average. A year ago, 5-year ARMs averaged 3.96%.