Mortgage rates dropped last week and they’ll probably go further, experts say.
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Mortgage rates averaged 3.45% last week, but by Friday? Data shows they had dropped even more.
In fact, according to daily rate surveys from NerdWallet, the average 30-year, fixed-rate mortgage clocked in at 3.37% on Friday—down 38 basis points over the month. It was also the lowest 30-year rate on record for the survey, which kicked off in mid-2016.
The dip has made buying a home significantly more affordable for the average buyer. At the close of January, the monthly payment on a $200,000 mortgage was around $926, given current rates. Now, a buyer could get a $209,600 home for the same payment.
Rates have also opened the door for refinance-related savings. According to data from financial data firm Black Knight, there are about 11.1 million high-credit homeowners who could shave at least 0.75% off their mortgage rates right now. On average, they’d save just under $270 per month.
The biggest savings can be seen in San Francisco, where homeowners can save nearly $58,000 by refinancing right now. Other California cities like San Jose, San Diego, Los Angeles and Sacramento also rank high for refi savings, according to the latest analysis from LendingTree.
This chart shows where homeowners can save the most by refinancing.
Courtesy of LendingTree
Still, those saving could jump considerably if rates fall further.
According to the Black Knight’s latest Mortgage Monitor report, “The population of refinance candidates remains extremely sensitive to even the slightest rate movements,” with big changes at every eighth of a basis point.
If average rates drop to 3.375%, 12.8 million homeowners could potentially cut 75 basis points from their loan’s rate. At 3.25%, 14.5 million would reap the benefit.
This graph shows how many high-credit homeowners could shave at least 0.75% off their mortgage rate … [+]
Courtesy of Black Knight
But are those lower rates possible? If the coronavirus continues spreading, NerdWallet’s mortgage expert Holden Lewis says definitely.
“The worse the COVID-19 outbreak gets, the lower mortgage rates will go,” Lewis says. “That’s the mortgage rate forecast for March in a nutshell: If COVID-19 becomes an epidemic in the United States, then rates on home loans are likely to fall even further.”
Still, there’s no telling what the future holds, and buyers and homeowners on the fence about their loans shouldn’t hold off in hopes of lower rates.
“Mortgage rates are unpredictable,” Lewis says. “When you can get a mortgage at the lowest rate in several years, it’s wise to lock it in and don’t look back. You’ll snag an awesome rate, whether or not rates continue to fall.”