Mortgage Rates Hold On at Lowest January Levels Since 2013

Doug Whiteman
Mortgage Rates Hold On at Lowest January Levels Since 2013

Borrowers who didn't pounce on last week's plunging mortgage rates have no reason to worry because rates are little changed this week — and are still at their lowest levels for mid-January since 2013, a closely followed survey shows.

Mortgage rates are being held down by unsettling world events, including the tense situation with Iran and the U.S.-China tariffs. All of the uncertainty could continue to keep rates low — meaning more opportunities for homebuyers and homeowners to cut their interest costs.

Mortgage rates stay down this week

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Mortgage rates are holding at low levels.

Mortgage rates are little changed from last week's lowest levels in three months, mortgage giant Freddie Mac reported Thursday. The average for a 30-year fixed-rate mortgage is now 3.65%, up a smidge from last week's 3.64%. The loans in the firm's survey come with an average 0.7 point.

One year ago, the benchmark mortgage rate was more than three-quarters of a percentage point higher, at an average 4.45%.

Thirty-year mortgage rates are the lowest for mid-January in seven years, MoneyWise.com has found, by reviewing Freddie Mac's historical data.

Rates fell sharply last week as the U.S. drama with Iran had investors pouring their money into safe-haven investments, including U.S. Treasury bonds. Bond prices went up, their yields (interest rates) went down, and so did mortgage rates.

The yields haven't recovered much, despite the announcement of a new U.S. trade deal with China. For now, many of the tariffs are still in place, which isn't very comforting for investors.

Use this calculator to see the kind of monthly payment you can expect from today's low rates.

Low rates should keep homebuying buzzing

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Low mortgage rates are bringing out the buyers.

Homebuyers and homeowners are bingeing on today's attractive rates. Mortgage applications shot up 30.2% last week, the Mortgage Bankers Association says. Applications for refi loans surged 43%, while mortgage "purchase applications" — for loans to buy homes — last week were at their highest level in over 10 years.

Homebuying and borrowing usually take a breather around the holidays and into the new year, but not this time, says Richard Pisnoy, a principal with Silver Fin Capital Group, a residential and commercial mortgage broker in Great Neck, New York.

The housing market is humming right now, and low mortgage rates are a big reason.

"There can be a huge difference to what type of home, cost of home and location of home based on what they can afford," Pisnoy says. "Low interest rates help keep principal and interest payments down, which can give people a better opportunity to purchase."

Check out today's best mortgage rates where you live.

The outlook for mortgage rates and housing

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Homebuyers will keep watching for the best rates.

Mortgage rates are likely to stay at historically low levels, with 30-year fixed-rate mortgages averaging 3.8% throughout both 2020 and 2021, according to Freddie Mac's current forecast.

Homebuyers will be paying attention, Pisnoy says.

"I believe that buyers always kept an eye on mortgage interest rates," he says. "Even though rates seem to have a bit more volatility today than yesteryear, they still have a significant impact to what a family can afford."

It's important to lock a good rate when you see one, because mortgage rates can be unpredictable.

Landing an attractive mortgage rate might be easier than finding something to buy, says Sam Khater, Freddie Mac's chief economist.

“While the outlook for the housing market is positive, worsening homeowner and rental affordability due to the lack of housing supply continue to be hurdles, and they are spreading to many interior markets that have traditionally been affordable," Khater says.

Other mortgage rates this week

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Homeowners are finding lower rates on 15-year refinance loans.

Rates on 15-year fixed-rate mortgages have inched up to an average 3.09%, from 3.07% last week. Those loans are a popular choice among homeowners who refinance.

A year ago, 15-year mortgages were averaging 3.88%, Freddie Mac says.

This week, rates have jumped on 5/1 adjustable-rate mortgages, or ARMs, which are level for five years and then can adjust up — or down — each year.

ARMs are currently being offered at an average initial rate of 3.39%, up from last week's 3.30%. Last year at this time, the starter rates on ARMs were averaging 3.87%.

Take a look at today's lowest mortgage rates available where you are.