Mortgage rates remained below the 3% mark this week, rising a slight 0.1% to 2.98% over last week according to Freddie Mac’s latest Primary Mortgage Market Survey (PMMS). A year ago at this time, the 30-year fixed-rate mortgage (FRM) averaged 3.23%.
“In light of the rising COVID caseloads globally, U.S. Treasury yields stopped moving up a month ago and have remained within a narrow range as the market digests incoming economic data,” said Sam Khater, Freddie Mac’s Chief Economist. “The good news is that with rates under 3%, refinancing continues to be attractive for many borrowers who financed before 2020. But, for eager buyers, especially first-time homebuyers, inventory continues to be extremely tight and competition for available homes to purchase remains high.”
Earlier this week, the Mortgage Bankers Association (MBA) reported that mortgage applications slid this week, dropping 2.5% over the previous week. Also declining were the share of refi applications, decreasing 1% from the previous week to 60.6% of total application volume, 18% lower than one year ago.
Freddie Mac also noted that the 15-year FRM averaged 2.31% with an average 0.7 point, up from last week when it averaged 2.29%. A year ago at this time, the 15-year FRM averaged 2.77%. The five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.64% with an average 0.3 point, down from last week when it averaged 2.83%. A year ago at this time, the five-year ARM averaged 3.14%.
As Khater noted, low rates generally result in ideal times to buy and refi, as the National Association of Realtors (NAR) found that pending home sales increased in March, snapping two consecutive months of declines, rising 1.9% in March over February. Year-over-year, contract signings rose 23.3%, with the difference due in large part to the pandemic-induced lockdown in March 2020. This rise also comes on the news that the MBA is projecting purchase originations on track to grow 16.4% to a new record of $1.67 trillion in 2021.
"Low inventory has been a consistent problem, but more inventory will show up as new home construction intensifies in the coming months, as well as from a steady wind-down of the mortgage forbearance program," said Lawrence Yun, NAR's Chief Economist. "Although these moves won't immediately replenish low supply, they will be a step forward."