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According to Freddie Mac’s Primary Mortgage Market Survey (PMMS) for this week, mortgage rates have continued to drop for the third week in a row. The organization polls approximately 125 banks and lenders nationwide regarding fees, rates and closing discount points for different mortgage products like the 30-year fixed-rate mortgage (FRM), 15-year FRM and the 5-year treasury-indexed hybrid adjustable-rate mortgage (ARM).
With an increase in the Federal Reserve’s interest benchmark, there have been talks of mortgage rates touching or crossing five percent; a drastic jump as this would negatively impact the dreams of many potential homebuyers.
But contrary to projections, the latest PMMS, conducted for the week ending on January 21st shows that the 30-year FRM has dropped from 3.92 to 3.81 in a week. This is the lowest it has dropped to in three months and is the biggest one-week change seen in the past 54 weeks. The 15-year FRM came in at an average of 3.10 and has dropped from 3.19 from the previous week.
The 5-year ARM had an average of 2.91 percent and has dropped from 3.01 percent from last week. Even though these rates are higher than a year ago, they still fall within a more attainable range for many homebuyers and homeowners looking to refinance or purchase a home.
These rates, though, are available to borrowers who are ready to shell out extra cash for the discount points during closing. The 30-year rate of 3.81 percent come with 0.6 points, which would translate to a little over $3,000 for a loan of $567,500.
Along with Freddie Mac loans, those offered by the Veterans Affairs (VA) and the Federal Housing Administration (FHA) have also dipped. And this looks like the best time to refinance with these loans because VA loans come with a bonus refinance program that does not require income verification, credit checks, employment verification or appraisals.
Similarly, loans insured by the FHA are backed with the FHA Streamline Refinance program that also does not require income, credit or employment verification.
With the mortgage rates at the current levels, experts forecast a similar pattern for the next few weeks. But since forecasts can always be overthrown, this just might be the right time to make a leap into homeownership before the rates start rising again.