The cost of getting a loan seems to be the one inexpensive attraction in today’s hot housing market as mortgage rates remain below 3% for the third week in a row. The average rate on a 30-year, fixed-rate mortgage stumbled two basis points to 2.96%, giving borrowers another shot at a sub-3% loan.

As this year moves onward into the most active time for real estate (spring and summer), the gridlock of low inventory, rising prices and high demand is expected to loosen, making it a slightly better time for homebuyers.

That’s partly because new sellers are emerging, with 18% more new homes for sales listed the first week in May compared to the same time last year. This is much-needed relief in a market facing a tremendous shortage of some 4 million homes.

Plus, more houses might be coming online soon, according to a recent survey of almost 4,000 people by The data showed that 10% of respondents plan on selling this year, while 16% said they are going to sell in the next two to three years.

Along with more supply, the supersonic rise of home prices has slowed—the weekly median listing price rose 15.4% year-over-year compared to 17.2% in mid-April.

More Remote Workers Plan to Move Next Year

Ultra-low mortgage rates have been a driving force in the hot housing market, but an increase in work-from-home capabilities are not too far from the spotlight.

The pandemic has provided many workers with the opportunity to work remotely, which means they’re no longer tied to the area where their job is based. And 42% of remote workers say they intend to move in the coming year, according to a recent survey by Apartment List.

Even more compelling: 35% of work-from-home adults plan to move to a more affordable area, over twice the rate of on-site workers.

Although higher prices triggered by low inventory can scare buyers into going over their budget (perception of scarcity raises the value), many real estate experts urge buyers to avoid stretching their dollars.

“You should always stay within your budget unless you expect an imminent change to your financial situation,” says Kevin Parker, vice president of Field Mortgage at Navy Federal Credit Union.

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30-year Fixed-rate Mortgages

The average rate for the benchmark 30-year fixed mortgage fell 2 basis points to 2.96%, according to Freddie Mac’s Primary Mortgage Market Survey. This time last year, the 30-year fixed was 3.26%.

Borrowers with a 30-year fixed-rate mortgage of $350,000 with today’s interest rate of 2.96% would pay $1,468.07 per month in principal and interest (taxes and fees not included), the Forbes Advisor mortgage calculator shows. The total interest paid over the life of the loan would be $178,506.75.

That same mortgage taken out a year ago would cost an additional $20,544.98 in interest over the life of the loan.

15-year Fixed-rate Mortgages

The average interest rate on the 15-year fixed mortgage stepped down 1 basis point this week to 2.3%. This time last year, the 15-year fixed-rate mortgage was at 2.73%.

Borrowers with a 15-year fixed-rate mortgage of $350,000 with today’s interest rate of 2.3% would pay $2,300.95 per month in principal and interest (taxes and fees not included). The total interest paid over the life of the loan would be $64,171.70.

5/1 ARMs

The average rate on a 5/1 adjustable-rate mortgage rose 6 basis points to 2.7%. Last year, the 5/1 ARM was 3.17%.

ARM are home loans that have an interest rate that fluctuates with the market. In the case of 5/1 ARMs, the first five years have a fixed rate and then switch to a variable rate after that. That means when the average rate rises or falls, so will your rate.

Traditionally, ARMs have lower interest rates than fixed-rate options, making them an attractive choice for borrowers who plan to sell before the fixed period expires.

What Low Rates Mean for Borrowers

Mortgage rates are at record lows, so this could be an opportune time for many folks who want to save money on a new home loan or refinance their existing mortgage.

Borrowers who want to get the lowest rate should make sure they have a credit score of at least 760. Lenders reserve their ultra-low rates for those with a strong credit profile, as this is a major indicator that borrowers are at low risk for late payments or default. In fact, borrowers with lower credit scores can be charged one percentage point or more than borrowers with very good or excellent scores.

Before you apply for a mortgage, check your credit score. Many banks and credit cards allow you to do this for free. One way you can improve your score relatively quickly is to pay down debt. You also can request credit for paying monthly bills on time, such as your internet or utility bills.

In addition to your credit score, lenders will look at your debt-to-income ratio, or DTI. This is your total monthly debt divided by your gross monthly income. It’s basically a snapshot of how much you owe versus how much you earn. The lower your DTI, the better chances you have of getting a lower interest rate. Most lenders require a minimum DTI of 43% just to qualify for a mortgage or refinance.

Finally, studies have shown that people who shop around tend to get lower rates than those who get a mortgage from the first lender they talk to. Know what the current average interest rate is as well as what your credit score, income, debt and expenses are before you start applying. If lenders offer you a rate that’s higher than you expected, be sure to ask them why so you can begin improving those areas to qualify for a lower rate.