Time to Refinance: Mortgage Rates Dip Back Below 3%

Homes against downward graph

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Ultra-low mortgage rates returned this week, with lenders offering home buyers and refinancers a chance once again to lock in a rate below 3%. But the National Association of REALTORS® warns that these low rates in the 2% range won’t last much longer, and mortgage rates likely will edge up soon. The 30-year fixed-rate mortgage averaged 2.95% this week, Freddie Mac reports.

“Mortgage rates are continuing to offer many homeowners the potential to refinance and increase their monthly cash flow,” says Sam Khater, Freddie Mac’s chief economist. Homeowners who refinanced their 30-year fixed-rate mortgage in 2020 saved more than $2,800 annually, Khater notes. “Substantial opportunity continues to exist today, as nearly $2 trillion in conforming mortgages have the ability to refinance and reduce their interest rate by at least half a percentage point.”

Freddie Mac reports the following national averages with mortgage rates for the week ending May 27:

  • 30-year fixed-rate mortgages: averaged 2.95%, with an average 0.7 point, dropping from last week’s 3% average. Last year at this time, 30-year rates averaged 3.15%.
  • 15-year fixed-rate mortgages: averaged 2.27%, with an average 0.6 point, falling from last week’s 2.29% average. A year ago, 15-year fixed-rate mortgages averaged 2.62%.
  • 5-year hybrid adjustable-rate mortgages: averaged 2.59%, with an average 0.2 point, unchanged from last week. A year ago, 5-year ARMs averaged 3.13%.

Freddie Mac reports average commitment rates along with average points to better reflect the total upfront cost of obtaining a mortgage.