With mortgage rates nearing record lows, NerdWallet’s Mortgage Interest Rate Forecast concluded June is a good time to refinance, as rates are expected to remain low for months.
The forecast found that the 30-year fixed-rate mortgage average 3.365% in May—the second-lowest average for the 30-year fixed-rate in the history of NerdWallet’s survey. It is second only to April’s 3.363%.
“Mortgage rates were remarkably stable all month, with the average 30-year fixed varying less than one-quarter of a percentage point from its lowest to its highest rate,” the report said.
The report adds that rates are expected to remain low for months as the Federal Reserve continues to buy billions of dollars’ worth of mortgage-backed securities “to support smooth market functioning.”
Fed Chairman Jerome Powell said in April that he expects the central bank to keep intervening in the market for "the next year or so.
As of Monday, the average rate on a 30-year fixed-rate mortgage fell two basis points to 3.378%.
The low-rate environment is starting to lure buyers back into the market. According to the latest survey by the Mortgage Bankers Association (MBA) for the week ending on May 22, the number of mortgage applications rose 2.7% from the prior week.
This weekly survey, known as the Market Composite Index, measures the volume of mortgage loan applications on a weekly basis. This 2.7% shows the seasonally adjusted amount, while unadjusted results reveal a 3% rise from the previous week.
Joel Kan, MBA’s AVP of Economic and Industry Forecasting, commented on this week’s rise in applications: "The housing market is continuing its path to recovery as various states reopen, leading to more buyers resuming their home search. Purchase applications increased 9% last week—the sixth consecutive weekly increase and a jump of 54% since early April.
Additionally, the purchase loan amount has increased steadily in recent weeks and is now at its highest level since mid-March.”
Kan added even more details that point to hope on the horizon: "Despite mortgage rates hovering near MBA's all-time survey low, refinance activity was essentially flat but still 176% higher than last year. Conventional refinance applications increased 2%, while government refinancing was down almost 7%.”