The average rate for the 30-year fixed-rate mortgage reached another new low, with the average rate coming in at 3.15%, according to Freddie Mac.
“The 30-year fixed-rate mortgage has again hit the lowest level in our survey’s nearly 50-year history, breaking the record for the third time in just the last few months,” said Sam Khater, Freddie Mac’s Chief Economist. “These unprecedented rates have certainly made an impact as purchase demand rebounded from a 35% year-over-year decline in mid-April to an 8% increase as of last week—a remarkable turnaround given the sharp contraction in economic activity.
Khater added that refinance activity remains elevated and low mortgage rates have been accompanied by a $70,000 decline in the average loan size of refinancing borrowers in 2020.
“This means a broader base of borrowers are taking advantage of the record low rate environment, which will benefit the economy,” he said.
The 30-year fixed-rate mortgage was 3.24% for the prior week and was 3.99%. The 15-year fixed-rate mortgage was 2.62%, which is a slight decline from the prior week’s 2.70%.
Danielle Hale, Chief Economist for realtor.com, said the low rate environment is a result of investors continuing to prefer the safety of bonds and Fed buying.
“Low rates are energizing home buyers with a boost in affordability and are bringing them back to the housing market, despite the swirling economic uncertainty,” Hale said. “The rush of buyers is putting pressure on the highly limited number of homes for sale. Sellers have been a bit slower to respond to the reopening, which has made late May feel more like March in terms of the balance of buyers and sellers in the housing market.”
According to the latest weekly survey conducting by Mortgage Bankers Association (MBA) for the week ending on May 22, spring has brought a surge in mortgage applications to the housing industry.
The MBA revealed that the number of mortgage applications rose 2.7% from the prior week’s statistics.
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.