If you haven’t locked in the low mortgage rates everybody’s talking about, don’t despair—it’s not too late. Fixed mortgage rates dropped again this week, putting them at their lowest level since May 2013—and analysts predict they’ll continue falling.
The 15-year fixed rate also hit a milestone this week, falling below 3% for the first time since May 2013.
“Mortgage rates fell for the third consecutive week as oil prices plummeted and long-term Treasury yields continued to drop despite a strong employment report,” said Frank Nothaft, vice president and chief economist at Freddie Mac. “The economy exceeded expectations by adding 252,000 jobs in December, which followed an upward revision of 50,000 jobs to the prior two months. The unemployment rate fell to 5.6 percent, which was the lowest since June 2008.”
The average interest rate on a 30-year fixed mortgage dipped to 3.66% from 3.73% last week, according to the latest survey from Freddie Mac.
A year ago at this time, it trended at 4.41%.
The average rate on a 15-year fixed mortgage also registered a drop, to 2.98% from 3.05% last week. A year ago, it averaged 3.10%, according to Freddie Mac.
Averages for the two most popular, hybrid adjustable-rate mortgages also fell. The five-year ARM dropped from 2.98% to 2.90%, week-over-week. The one-year ARM trended down slightly, to 2.37% from 2.39% a week ago.
With interest rates falling, mortgage applications nearly doubled in the week ending Jan. 9, compared with the week before, according to the Mortgage Bankers Association.
Those gains were driven mostly by homeowners looking to refinance, the trade group said.
Refinancing could be bolstered further by an Obama administration decision last week to cut the premiums charged by the Federal Housing Administration on its loans.
The U.S. Department of Housing and Urban Development estimates that 100,000 to 200,000 borrowers could refinance loans guaranteed by the program this year.
The FHA estimates that an additional 250,000 first-time buyers will enter the market after the premium reductions.
So, what if you haven’t taken advantage of these historically low rates? In the short term, many analysts say there’s still time to cash in.
In the latest Mortgage Rate Trend Index by Bankrate.com, 64% of the panelists polled think rates will continue to fall, while 7% say rates will increase.
“If you took out a mortgage in the last few years, you certainly want to pull out your mortgage statement and see if you can improve your situation,” said Jim Sahnger, mortgage planner with Schaffer Mortgage in Palm Beach Gardens, FL. “If you took out an FHA mortgage in the last few years, even last year, pick up the phone and call a lender.”