30-year home loan dips below 3%

WASHINGTON — Average rates on long-term mortgages continue to fall to record lows, as the key 30-year loan dropped below 3% for the first time in 50 years. The stagnant economic recovery in the face of the coronavirus pandemic is keeping inflation tamped down despite pent-up home-buying demand.

Mortgage buyer Freddie Mac, the Federal Home Loan Mortgage Corp, reported Thursday that the average rate on the 30-year loan fell this week to 2.98% from 3.03% last week. These are the lowest levels since Freddie Mac began tracking averages in 1971. The rate averaged 3.81% a year ago.

The average rate on the 15-year fixed-rate mortgage declined to 2.48% from 2.51%, from last week.

U.S. homeowners are seizing on the low rates to refinance their mortgages.

Americans refinanced nearly 2 million home loans from January through April, more than double the same four-month stretch in 2019, according to real estate data company CoreLogic. And “cash-out” refinancing, when homeowners withdraw equity from their home’s value, typically to pay down higher-interest debt or cover remodeling expenses, rose more than 70% from a year earlier.

“The refi share is through the roof,” said Frank Nothaft, chief economist at real estate data firm CoreLogic. “It’s way up from a year ago and it’s accounting for the bulk of lending.”

Through the first four months of the year, about 1.9 million mortgages with a dollar value of $576 billion were refinanced, according to CoreLogic. They accounted for 64% of home loans during that period, the firm said. Of those, cash-out refinancings made up about 15% of all loans.

Refinancing can lower monthly payments and in some cases allow homeowners to tap additional cash from the equity in their home.