30-year mortgage rates drop slightly as market awaits Fed’s March rate hike

Homebuying activity remains strong as rates trend up

Mortgage rates decreased slightly this week as the market awaits the Fed's next rate hike.  (iStock)

Mortgage rates decreased slightly this week, according to the latest data from Freddie Mac. This comes as the market awaits the upcoming rate hike, which the Federal Reserve signaled could come in March.

The 30-year fixed-rate mortgage dropped to 3.55% annual percentage rate (APR) for the week ending Jan. 27, Freddie Mac’s Primary Mortgage Market Survey showed. This is down slightly from 3.56% last week but up from 2.73% last year.

"This week’s Fed meeting reinforced the idea that interest rates are moving higher, with Fed rate hikes likely to begin as soon as March," Realtor.com Chief Economist Danielle Hale said. "However, long-term Treasuries bounced down and then up again this week, as investors evaluated whether they are correctly positioned to navigate the tightrope of a Fed tightening cycle and other economic growth risks against a still-strong economy."

Borrowers can take advantage of the current rates by refinancing their mortgage to lower their monthly payments. Visit Credible to find your personalized interest rate without affecting your credit score.


Rates could begin to rise again soon

Although the 30-year fixed-rate mortgage is down, other mortgage types saw rates increase this week. The 15-year mortgage increased to 2.8%, up from 2.79% last week and 2.2% last year. The five-year Treasury-indexed hybrid adjustable-rate mortgage increased to 2.7%, up from 2.6% last week but down from 2.8% last year.

However, all interest rates could begin to increase again soon, experts said. Hale explained that the decrease in 30-year mortgage rates is likely temporary and pointed out that it's up by 50 basis points from the beginning of this year. Freddie Mac also agreed with this, saying an increase in mortgage rates is expected. 

"We do expect rates to continue to increase but at a more gradual pace," Freddie Mac Chief Economist Sam Khater said. "Therefore, a fair number of current homeowners could continue to benefit from refinancing to lower their mortgage payment."

If you are interested in refinancing your mortgage with a lower rate to get a reduced monthly payment, visit Credible to compare multiple mortgage lenders at once and choose the one with the best option for you.


Homebuying activity remains strong despite rising rates

Although mortgage rates have been rising, Khater said homebuying activity has remained strong.

"Following a month-long rise, mortgage rates effectively stayed flat this week," he said. "Recent rate increases have yet to significantly impact purchase demand, as history demonstrates that potential homebuyers who are on the fence will often enter the market at the start of rate increase cycles."

If you are interested in buying a home or refinancing your current mortgage before the market sees higher interest rates, contact Credible to speak to a home loan expert and get your questions answered.

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