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US Finance

Mortgage rates fall: Is it a good time to refinance my mortgage?

The average interest rate for a traditional mortgage has fallen to the lowest level since February, but is now a good time to be buying a house?

Update:
How will the interest rate hike affect me?
Jim WatssonAFP

What's happening to mortgage rates?

The average interest rate for traditional 30-year mortgages decreased to 3.09% last week, the lowest level since February, from 3.15% the prior week.

Rates continued to fall across the board this week for different length mortgages, except for a 15-year fixed-rate mortgage. All fixed-rate mortgages have decreased in interest in comparison to this time last year.

US weekly average mortgage interest rates

  • 30-year fixed rate mortgage: 2.88% (down 0.02 in a week and down 0.10 in a year)
  • 15-year fixed rate mortgage: 2.22% (up 0.02 in a week and down 0.26 in a year)
  • 5-year fixed rate mortgage: 2.47% (down 0.05 in a week and down 0.59 in a year)

Analysts say this should offset the rising price of houses; low mortgage rates mean the cost to finance a house should stay the same or slightly decrease.

Despite this, home sales have fallen for the fourth month in a row as there simply aren't enough houses to buy. Rising home prices combined with insufficient supply has continued to impact the housing market.

The low-interest rates must also be seen in the context of rising inflation across the US which should offset the interest rates somewhat. Inflation rose to a 13-year high last month, a rise of 5.4% after a rise of 5% in May.

Is it a good time to refinance my house?

Melissa Cohn, an executive mortgage banker at William Raveis Mortgage, said now is a good time to revisit financing your mortgage.

It could be a chance for those who missed out on the low-interest rates of February to save some money on their mortgage.

And American homeowners are taking the opportunity to do this.

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