Chicago home buyers can still lock in low mortgage rate
Loop North News

The Home Front

19-Apr-21 – Chicago home buyers and homeowners seeking to refinance this spring still may have a chance to lock in a near rock-bottom interest rate and save money, experts say.

On April 15, benchmark 30-year fixed mortgage rates nationwide fell to an average of 3.04 percent from 3.13 percent a week earlier, reported Freddie Mac’s Primary Mortgage Market Survey.

Freddie Mac

On April 1, 30-year fixed rates hit an average of 3.18 percent nationwide, a rise of more than half a percentage point, after setting a modern-day record low of 2.65 percent on January 7, 2021.

The bargain 2.65 percent benchmark is the lowest rate in the Freddie Mac survey’s history that dates back to 1971. A year ago, lenders were charging an average of 3.31 percent for 30-year fixed loans.

Sam Khater

“Mortgage rates took a dip on April 15th when the 30-year fixed-rate mortgage decreased by almost 10 basis points, week over week,” said Sam Khater (left), Freddie Mac’s chief economist. “The economy is improving on the demand side – and on the supply side, a variety of goods and materials remain scarce. As a result of this imbalance, pricing pressures are building and causing inflation to rise.”

Despite the recent dip in mortgage rates, Freddie Mac’s economists expect interest charges to increase modestly for the remainder of this year, so Khater urged home buyers to act quickly if they want to lock in a mortgage in the low-3 percent range.

The Freddie Mac survey reported that 15-year fixed-rate mortgages nationwide averaged 2.35 percent, down from 2.42 percent a week earlier. A year ago, the 15-year fixed home loan averaged 2.80 percent.

In Chicago, Gateway Capital Mortgage was quoting 2.877 percent on 30-year fixed loans, and 2.125 percent on 15-year fixed mortgages on April 15, according to RateSeeker.

The Freddie Mac survey is focused on conventional, conforming, fully amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit.

In 2020, mortgage interest rates set new record lows an amazing 16 times, and thousands of first-time home buyers moved across the threshold into new and existing housing.

There may be a brief window of opportunity for locking in a near-record low interest rate this spring for buyers who move quickly.

Photo by Brian Jackson

Photo by Brian Jackson

Analysts said long-term mortgage rates moved higher because of rising interest rates on 10-year Treasury notes. Recently, they rose to 1.74 percent from a shockingly low 0.54 percent during the depths of the pandemic. On April 15, the 10-year Treasury note yield slipped to 1.53 percent from 1.63 percent a week earlier.

Refinance window open, too

The window to save money also may still be open for homeowners seeking to refinance, since mortgage rates still are lower than last spring when the pandemic began.

Looking back even further, today’s average rate is 1.27 percent lower than the 4.31 percent lenders were quoting in March 2019. For the last five to ten years, the average 30-year fixed mortgage rate has floated in the 4 percent range.

Homeowners who refinanced their mortgage as recently as two years ago are still likely to cut their monthly payment if they refinance again this spring. For example, the monthly payment on a $350,000 loan two years ago would be about $240 less on average today.

By Don DeBat | Loop North News |


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