After climbing during the spring, mortgage rates have gone all the way back down to where they were in February, according to a long-running survey. And that means borrowers are again able to take out loans with rates that are at or near all-time lows.
Mortgage rates have plunged as America’s current COVID surge has rattled investors and made them feel less confident about the economic recovery.
The drop also has accompanied the end of an unpopular refinance fee — a move that has provided even more savings for homeowners taking out new loans.
Mortgage rates fall to a 6-month low
When rates were rising a few months ago, some experts said 30-year fixed-rate mortgages were headed to an average 4%. But this summer, rates have been moving in the opposite direction.
This week, the 30-year fixed has fallen to an average 2.77%, mortgage giant Freddie Mac reported on Thursday. That’s the lowest in almost six months, and it’s down from last week’s 2.80%.
The current rates aren’t too far from early January’s average of 2.65%, which was the lowest ever recorded in Freddie Mac’s 50-year-old weekly survey.
The survey rates come with an average 0.6 point. One year ago, borrowers were landing 30-year fixed-rate mortgages with higher rates, averaging 2.88%.
Mortgage rates are reflecting investor worries about the course of the pandemic, says Sam Khater, Freddie Mac’s chief economist.
“With global market uncertainty surrounding the delta variant of COVID-19, we saw 10-year Treasury yields drift lower and consequently mortgage rates followed suit,” Khater says. “This bodes well for those still looking to refinance, renovate or even purchase a new home.”
Goodbye refi fee, hello lower rates
Another reason rates have been going down is that last weekend marked the final goodbye to a fee that had been adding 0.5% to the cost of a refinance since late 2020.
Many lenders had been passing along the surcharge to consumers through increases in mortgage rates, of between one-eighth to one-quarter of 1 percentage point (0.125-0.25), according to an analysis by Mortgage News Daily.
A refinance cost the typical homeowner an extra $1,400 because of the fee, the Mortgage Bankers Association said.
Regulators first announced the fee nearly a year ago to help Freddie Mac and Fannie Mae weather the pandemic. The two government-sponsored companies buy most U.S. home loans from lenders, and officials said the firms were facing losses of at least $6 billion from expected defaults and foreclosures related to COVID-19.
In mid-July, the Federal Housing Finance Agency announced that the “adverse market fee” was no longer necessary, and that it would be eliminated as of Aug. 1.
“Eliminating the…
Read More: Mortgage rates hit new 6-month low as refinance fee ends, delta variant