A report by Lending Tree found that the average percentage rate (APR) offered to borrowers looking to purchase a home across the nation’s 50 largest metros fell by 17% annually in April.
The average APR for all 50 metros in April 2019 was 4.75%, which is significantly higher than April 2020’s 3.92%.
The drop for those who want to refinance, however, saw an even larger drop, as Lending Tree reports the average APR for refinances fell by 19.6% to 3.71%. This is down from April 2019’s 4.61%.
Purchase borrowers in San Jose; Nashville, Tennessee; and Cleveland were home to largest year-over-year declines in APRs, with all three having APRs of 3.76%. This represents a 21.8% drop from the 4.80% APR last year.
The APRs offered to purchase borrowers saw the smallest decline in Buffalo, New York; Hartford, Connecticut; and Indianapolis, but are still lower than at this time last year. The average APR across all three metros fell by more than 10% in April 2020 to 4.34%.
Hartford; San Francisco; and San Jose had the largest drops in APRs offered to borrowers to refinance. The average APR was 3.53%, which is a 21% decline from April 2019.
Declining rates are becoming the norm across the nation, as Freddie Mac’s latest Primary Mortgage Market Survey revealed the average 30-year fixed-rate mortgage was 3.23%—the lowest in the survey’s 49-year history.
“The size and depth of the secondary mortgage market is helping to keep rates at record lows. These low rates are driving higher refinance activity and have modestly helped improve purchase demand from their extremely low levels in mid-April,” said Sam Khater, Freddie Mac’s Chief Economist. “While many people are benefiting from low mortgage rates, it’s important to remember that not all people are able to take advantage of them given the current pandemic.”
This is a decline from the prior week’s 3.33% and last year’s 4.14%. The average rate for a 15-year fixed-rate mortgage was 2.77%—lower than the prior week’s 2.86% and last years’ 3.60%.
Record-low mortgage rates, however, did not influence enough buyers to enter the market, as mortgage applications fell 3.3% from the prior week, according to the Mortgage Bankers Association (MBA).