Rates on home loans are holding steady this week — meaning borrowers are still finding the lowest mortgage rates for any December in seven years, according to a widely followed survey.
But the spoils aren't being enjoyed equally by homebuyers and homeowners. Buyers who would love to take advantage of the reduced rates aren't finding enough homes for sale in many parts of the country.
On the other hand, people who already own homes and have mortgages are still able to refinance at much better mortgage rates, even if their loans are only a year or so old.
If you spy an attractive mortgage rate, give serious thought to locking it — so it won't get away from you.
This week's numbers
Across the board, the current mortgage rates are pretty much identical to last week's. The average on 30-year fixed-rate mortgages is unchanged at 3.73%, mortgage giant Freddie Mac said Thursday. The loans in the Freddie Mac survey come with an average 0.7 point.
One year ago, the benchmark mortgage rate was nearly a full percentage point higher, at 4.62%, on average.
This month, mortgage rates have been the best for this time of year since 2012, MoneyWise.com discovered by sorting through Freddie Mac's historical data.
As a result, lenders have been unusually busy.
"December is traditionally a slow time of year for mortgage applications due to the upcoming holidays," says Alan Rosenbaum, founder and CEO of GuardHill Financial Corp., a mortgage banker and brokerage firm in New York. "Due to rates being low, volume is a little stronger than most Decembers."
Use this calculator to see the kind of monthly payment you can expect from today's low mortgage rates:
Refi opportunities remain
If you took out a home loan just last year, you might still be able to lower your monthly payment dramatically by refinancing into a new loan at a lower rate.
Homeowners who refinanced their mortgages during the spring are now saving an average of about $140 a month, or $1,700 a year, Freddie Mac has said.
Refis are hot: Applications for refinance loans have been running about two and a half times higher compared to last year at this time. If mortgage rates go up, the refinance numbers could swell even further, says Rosenbaum.
"When rates are low, many homeowners do not look to lock in savings but wait for rates to go lower," he says. "When rates start to rise, homeowners realize that they missed the bottom and refinance before rates increase further."
Because of the refi opportunities, the current mortgage rates are more of a boon to homeowners than to homebuyers. First-time buyers, in particular, have had a tough time finding houses they can afford.
"The demand is clearly not being met for entry-level millennials and trade-up Generation X home buyers," says Sam Khater, the chief economist at Freddie Mac. "If there was more inventory of unsold homes for buyers to choose from, home sales would be rising at a faster rate."
The outlook for mortgage rates
Low mortgage rates are part of the "sweet spot" the U.S. economy is in right now, says Khater.
"The economy continued to pick up momentum with a solid increase in residential construction, improvement in industrial output in our nation’s factories and a rise in job openings," he says.
Take a look at today's best mortgage rates where you live.
Freddie Mac is forecasting a slight rise in mortgage rates in 2020, to an average 3.8% for 30-year fixed-rate loans.
Rosenbaum, of GuardHill Financial, is looking forward to the new year.
"2019 has been a very strong year for purchase activity and refinancing activity," he says. "We are projecting another strong year as home prices dip and mortgage rates increase. Both factors motivate intelligent homeowners to finance real estate."
This week's other mortgage rates
The average for 15-year mortgages also has held steady this week, at 3.19%. Those shorter-term home loans are often used for refinances.
Last year at this time, 15-year fixed-rate mortgages were much higher, at 4.07%, on average, Freddie Mac says.
Rates have inched up a notch on 5/1 adjustable-rate mortgages, or ARMs, which are level for five years and then can adjust up — or down — every year thereafter.
ARMs are currently being offered at an average initial rate of 3.37%, slightly above last week's 3.36%. A year ago, the starter rates on ARMs were averaging 3.98%.
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