Mortgage rates this week have stuck very close to their recent record low, but a new report shows it’s vital for borrowers to shop around to get the lowest possible rates.
If you don’t, you can wind up paying tens of thousands of dollars more than you should over time.
That’s according to researchers who say they’re finding wide differences in rates offered by different lenders, particularly in a few of America’s biggest cities.
Average mortgage rates edge higher
Mortgage rates inched up this week to an average 3.33% for a 30-year fixed-rate home loan, from 3.31% last week%, mortgage giant Freddie Mac reported on Thursday.
Rates remain very near the record low of 3.29% reached last month in the Freddie Mac survey, which goes back to 1971.
The survey rates come with an average 0.7 point. Last year at this time, the typical rate on a 30-year fixed-rate mortgage was close to one full percentage point higher, at 4.20%.
“Mortgage rates have stabilized over the last few weeks as the market searches for direction in the fog of economic data,” says Sam Khater, Freddie Mac’s chief economist.
The benchmark mortgage rate has remained around its current level for the entire month of April, and Freddie Mac predicts rates will stay low throughout the year. The firm forecasts that 30-year mortgage rates will average 3.3% during 2020, way down from last year’s 3.9%.
Study shows rates can be much higher than average
Despite what the averages say, the rates offered to borrowers can vary from one lender to the next by close to a full percentage point in many parts of the U.S., according to new research from LendingTree.
In other words, you might find one 30-year mortgage at 3.35%, another at 4.21%. And those differences can turn into big money.
“If you’re buying a home in San Francisco, taking the first mortgage offer you receive without shopping around could cost you more than $59,000 in interest over the life of your loan,” says Tendayi Kapfidze, LendingTree’s chief economist.
In Orlando, Florida, the lifetime interest savings can exceed $40,000. The average savings nationwide for homeowners who comparison-shop to find the best mortgage rates is more than $37,500.
“It pays to do your research,” Kapfidze says.
LendingTree focused on the mortgage “purchase rates” extended to homebuyers. Homeowners can save massive amounts of money, too, by looking at refinance rates side by side and choosing the best offer.
Other mortgage rates this week
Rates on other popular types of mortgage loans are mixed.
The average for a 15-year fixed-rate mortgage has jumped to 2.86%, from 2.80% last week, Freddie Mac says. Fifteen-year loans are a popular option for homeowners who refinance. Those mortgages were averaging 3.64% one year ago.
Rates on 5/1 adjustable-rate mortgages have dropped again. The loans known as “ARMs” have fixed rates for five years and then can adjust up or down every year.
ARMs are currently being offered at an initial rate of 3.28%, down from 3.34% last week.
At this time last year, the starter rates on those mortgages were at an average 3.77%.