Mortgage rates jump for first time in weeks, but still near historic lows: 3 tips to get the best rate
For the first time in nearly two months, mortgage rates increased on a weekly basis, according to the latest Freddie Mac Primary Mortgage Market Survey.
The average rate on the 30-year fixed mortgage rose to 2.87% for the week ending Aug. 11, and the mortgage giant's chief economist pointed to a strengthening job market as a possible reason why.
"Following last Friday's strong jobs report, which revealed broad based gains in employment and wage growth, mortgage rates are moving higher," Sam Khater said. "The 30-year fixed-rate mortgage increased by ten basis points week over week. Despite the rise, rates remain very low, particularly given that economic growth is strong and will continue into next year."
Amid historically low interest rates, homeowners may want to consider refinancing their mortgage. By doing so, they can lower their monthly payment and use money saved for other expenses. Use Credible's free online tool to research different mortgage refinance lenders and see what your loan options are.
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Will mortgage rates continue to increase?
As rates rise, economists say they will continue to move in the sub-3% range until the Federal Reserve begins to raise rates. Last year, the 30-year mortgage averaged 2.96%.
The 15-year fixed-rate mortgage also increased in mid August, rising from 2.1% to 2.15%. However, this is still down from 2.46% last year. The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) increased from 2.4% last week to 2.44%, but remained lower than last year’s 2.9%.
"Rates are expected to bounce around below the 3% mark until the Fed clarifies a timeline for the expected tapering of monthly mortgage-backed securities purchases," Realtor.com Senior Economist George Ratiu said in a statement. "My expectation is that a monetary taper will drive mortgage rates upward, likely toward the end of the year."
Homeowners can take advantage of lower interest rates before they begin to rise further to save money on their monthly payments. Visit Credible to get preapproved in minutes without affecting your credit score.
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How can homeowners get lower interest rates?
Although mortgage interest rates have gone up, there are still steps borrowers can take to ensure their mortgage rate remains low.
Modify your loan: If you are struggling to make mortgage payments due to a financial hardship, many mortgage lenders and servicers will work with homeowners to change their loan terms including term length or the interest rate to help them keep up with their monthly mortgage payments.
It's important to note that your original lender needs to agree to the terms of your new loan, if you do want to modify it.
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Refinance your mortgage: Interest rates remain at record lows and are averaging below the 3% mark for a 30-year fixed-rate mortgage. Millions of homeowners could still save money through a mortgage refinance, even those that bought a home as recently as the beginning of 2020.
A home loan refinance could help you potentially save thousands in interest. Bear in mind that there will be fees associated with a refi, like title insurance and a loan origination fee. If you can recoup the refinance cost in a few years, doing so might be worth your while.
Visit Credible to compare multiple mortgage lenders at once and find the option with the lowest interest rates and that best fits your needs.
Comparison shop for the best rate: As interest rates rise, both homeowners and buyers can make sure they are getting the best rate by comparing interest rates from multiple lenders.
Many go with the first lender that gives them a quote, but comparing multiple lenders can save them money and save them thousands of dollars over the life of the loan. Use an online marketplace like Credible to find the best mortgage lender for you and get a lower rate.
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