This may be a great opportunity for borrowers looking to secure a lower rate. According to Freddie Mac, the average 30-year fixed-rate mortgage (FRM) is 3.12% for the week ending May 21, 2021. The 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) meanwhile averaged 2.83%.
These low rates have helped to stimulate the housing market and allowed more Americans to purchase homes. As of April 2021, 10.7 million purchase loans were originated, up from 9.8 million reported in the first quarter of 2021. This is the highest number of purchase loans originated since the third quarter of 2020. In addition, there was an increase in refinance activity, as 11.9 million loan refinancings were completed in the first quarter of 2021, compared to 10.7 million in the fourth quarter of 2020.
The ongoing availability of low-interest rates has also encouraged homebuyers to consider adjustable-rate mortgages (ARMs). ARMs allow borrowers to get a lower initial interest rate than on a fixed-rate mortgage, but rates can go up after the initial period ends. ARMs are particularly attractive for borrowers who plan to move within five to seven years or who expect their incomes to increase in the future.
Overall, mortgage and refinance rates continue to remain low due to the impact of the coronavirus pandemic. Low interest rates have enabled more Americans to purchase homes or refinance existing mortgages. The availability of adjustable-rate mortgages has been especially attractive for potential homebuyers, giving them the ability to access lower initial interest rates. Borrowers should consult with lenders in order to determine the type of loan that best fits their individual needs and circumstances.
This article was contributed on Nov 14, 2023
