Mortgage rates slip below 3%, again

·Editor
·2 min read

Mortgage rates slipped below 3% again, providing another opportunity for homeowners to refinance. Buyers, on the other hand, face other housing challenges that offset the benefits of low rates.

The rate on the 30-year fixed mortgage — the most common home loan — fell to 2.95% this week, down from 3% last week, according to Freddie Mac, a government-sponsored entity that backs millions of mortgages. The rate was 3.15% a year ago this week and hit an all-time low of 2.65% in January.

“The slide in consumer confidence and declines in home sales — both new and existing — further influenced the move toward bonds,” George Ratiu, senior economist at Realtor.com, told Yahoo Money. “With 10-year Treasury yields dropping, mortgage rates followed suit, sliding below 3%.”

(Credit: Freddie Mac)
(Credit: Freddie Mac)

Right now, rates continue “to offer many homeowners the potential to refinance and increase their monthly cash flow,” said Sam Khater, Freddie Mac’s chief economist, in a press release, noting that homeowners who refinanced last year saved more than $2,800 annually.

The rate on nearly $2 trillion in mortgages could be reduced by at least a half point through refinancing at current rates, Khater added.

In the housing market, many homebuyers may have a tough time taking advantage of the low rates, though. There’s still a historically low number of homes for sale, which has pushed the volume of sales down. The number of homes under contract to be sold unexpectedly fell 4.4% in April from the previous month, according to the National Association of Realtors, which cited the lack of supply.

NEW YORK, NEW YORK - MARCH 31: A home stands for sale in a Brooklyn neighborhood with a limited supply of single family homes on March 31, 2021 in New York City. As Americans increasingly look for larger spaces now that many are working and educating their children from home, prices of homes have risen an estimated 16% as supply can't meet demand. The number of homes for sale stands at a record low, with only a two-month supply at the current pace of sales.  (Photo by Spencer Platt/Getty Images)
A home stands for sale in a Brooklyn neighborhood with a limited supply of single family homes on March 31, 2021 in New York City. (Photo by Spencer Platt/Getty Images)

But housing prices continue with record increases this year. The latest S&P CoreLogic Case-Shiller national home price index released on Tuesday showed that home values jumped 13.2% year over year in March, marking the fastest pace in more than 15 years.

Ratiu expects rates to gradually rise this year, averaging 3.2% for 2021 as economic activity and employment strengthen.

“We are entering a volatile period for mortgage rates over the next few months,” he said, “as investors react to wide business re-openings, while taking monetary changes into consideration.”

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Janna is an editor for Yahoo Money and Cashay. Follow her on Twitter @JannaHerron.

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