If by some chance you haven’t kept an eye on mortgage rates recently, you’d be surprised to see the numbers. After a slow and steady increase since January, growth halted at the end of March. Now we’re seeing a continuous decline in interest rates for the fourth week in a row. Let’s take a closer look at how individual mortgage rates are shaping up at the end of April 2021.
30-year fixed mortgage rates
The 30-year fixed mortgage rate averages 3.11%. It’s the most popular mortgage type out there and though it has a higher interest rate, the monthly payment is lower because payments are spread over 30 years.
15-year fixed mortgage rates
For a 15-year fixed mortgage, the average rate is currently at 2.40%. This mortgage has a lower interest rate, so you’ll end up paying less in total. These loans are generally a better deal if the borrower can handle a higher monthly payment (because of the shorter term).
5/1 adjustable-rate mortgages
The average interest rate for a 5/1 adjustable-rate mortgage is sitting at 3.12%. Adjustable-rate mortgages offer an initial period of 5 years with a fixed rate, and then it adjusts automatically once per year based on current rates. Considering that this type of loan is likely to become more expensive as time goes on, and the current rate is the same as the 30-year fixed-rate, ARMs aren’t the best option for borrowers right now.
30-year fixed refinance rates
As of now the average interest rate for a 30-year fixed refinance is 3.16%. If you somehow missed a chance to refinance your mortgage last year, now is a good time to do this. Current interest rates won’t stay that low forever.
15-year fixed refinance rates
15-year refinance rates average at 2.48%. Just as with a 30-year fixed, now is a good time to lock in a lower interest rate with a 15-year fixed refinance.
What’s next for mortgage rates?
According to researchers from Freddie Mac, mortgage rates are expected to slightly increase as the year goes by, but the overall rates will float around 3% for 30-year fixed mortgages.
Fannie Mae’s researchers predict similar rates. There’s an expected rise in rates related to the 10-year Treasury yield.
While current mortgage and refinance rates are close to historical minimums, the actual demand for these continues to decline. This week we saw a decline of 2.5% in total mortgage applications and 1% in refinance applications compared to the previous week. It’s not a surprise, considering that borrowers had enough time to refinance their loans already. A decrease in new originations could be explained by an unprecedented shortage of new houses for sale. This situation causes sharp competition among buyers and housing price increase, which makes buying a house much less affordable.
Condos could be a good alternative for buyers who want to benefit from low mortgage rates but can’t afford an expensive house. Recently, condos saw a 29.1% increase in sales compared to the previous year. The median price of a condo in Q1 is $289,000 compared to $347,500 for houses. This difference could be crucial for borrowers who struggle with the down payment.
With that in mind, we should expect a strong economic rebound, which is usually accompanied by increased interest rates. Current low rates will likely go away soon. For mortgage professionals it’s a perfect opportunity for one final push: their leads can be offered a new loan with a lucrative interest rate; existing customers will benefit from refinancing their existing loan instead.
What do you think about the current fall in mortgage rates? How has it affected your business?
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