Long-term mortgage rates fell last week to 3.89 percent, their lowest level in over a year and a half, according to a weekly survey by Freddie Mac.
Rates for a 30-year fixed mortgage at this time last year were 4.46 percent.
“Mortgage rates were down across the board on a week of underwhelming economic releases,” Freddie Mac vice president and chief economist Frank Nothaft said in a statement.
Related: This Could Be Your Last Shot to Refinance a Mortgage
The survey, released before Friday’s strong jobs report, reflected market disappointment with new home sales and ADP’s payroll growth estimates.
Economists expect rates to march slowly upward throughout next year, when the Fed will almost certainly start raising rates. The Mortgage Bankers Association predicts rates will rise to 5.1 percent by the end of 2015 and 5.8 percent the following year.
Millions of Americans have already refinanced at the record-low rates available in recent years. Still, one in five households that could have refinanced in recent years still has not done so, a recent paper published by the National Bureau of Economic Research found. Homeowners who miss this opportunity will pay an additional $11,500 over the life of their mortgage, the paper reported.
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Refinancing typically makes sense if you can recoup the closing costs (typically 2 percent to 5 percent of the loan) within three to five years and if you have no immediate plans to move.
Refinancing is also a smart move for homeowners with an adjustable-rate mortgage that could get significantly more expensive as rates start to rise.
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