Mortgage rates hover near record lows, despite new fee

Mortgage rates hover near record lows, despite new fee

Average mortgage rates are staying close to record lows, according to a popular survey, even amid reports that many lenders have been raising their rates to pass along the cost of a new refinance fee.

Experts say rate changes could remain modest for the foreseeable future, barring significant COVID-19 developments. So, even as that new surcharge looms, borrowers may still have time to lock in low rates before the fee has more impact.

Rates rise, but only slightly


Mortgage rates ticked up slightly last week, to an average of 2.90% for a 30-year fixed-rate loan, from the previous week’s 2.87%, mortgage company Freddie Mac said on Thursday.

That was after a run of record lows that had rates bottoming out at just 2.86% two weeks ago. One year ago, 30-year fixed-rate mortgages were averaging 3.64%.

Historically low mortgage rates are turbocharging the housing market, says George Ratiu, senior economist at

“Sales of existing homes continue rising, while inventory reaches new lows,” he says. “The combination of high demand and low supply is driving prices 11.1% higher than a year ago.”

But that mix could eventually hurt home sales, says Sam Khater, Freddie Mac’s chief economist.

“While there is room for rates to decrease even more, higher home prices and low inventory could potentially stifle the high demand that we’ve been seeing,” he said.

The average rate for a 15-year fixed-rate mortgage also rose last week — hitting 2.40%, from 2.35% a week earlier. Those mortgages are often used for refinance loans, and the rates are down sharply from last year, when the average was 3.16%.

Rates on 5/1 adjustable-rate mortgages, or ARMS, fell to an average 2.90%, from 2.96%.

There’s still time to take advantage of low rates


Though the new 0.5% fee on most U.S. refinance loans doesn’t technically go into effect until Dec. 1, experts already have observed lenders passing the cost on to consumers by raising mortgage rates across the board.

We saw a preview of this in mid-August. Rates soared when the fee was first announced and was given a Sept. 1 start date, but a federal regulatory agency delayed it by three months — and rates dropped back down for a while.

Rates overall have basically been flat for the last two weeks, largely thanks to the Federal Reserve, says Matthew Speakman, an economist with Zillow.

“With the Fed likely to keep interest rates at zero and a steady pace of mortgage bond purchases, upward pressure on mortgage rates will be limited in the near future,” he says.

That means there’s still time to lock in the best rates for homeowners who’ve been waiting to refinance their mortgages and save. An estimated 19.3 million mortgage holders could lower their interest rates to reduce their monthly payments by an average $299 a month, the mortgage data firm Black Knight recently reported.

Shopping around is essential for getting the best rates; borrowers who get five rate quotes save an average of $3,000 more than those who get just one quote, a Freddie Mac study found.

Comparison shopping also works very well when you’re trying to save on your home insurance.