Mortgage rates hit a new all-time low, as the average 30-year fixed-rate mortgage reached 3.13% in Freddie Mac’s Primary Mortgage Market Survey.
“While the rebound in the economy is uneven, one segment that is exhibiting strength is the housing market. Purchase demand activity is up over twenty percent from a year ago, the highest since January 2009. Mortgage rates have hit another record low due to declining inflationary pressures, putting many homebuyers in the buying mood,” said Sam Khater, Freddie Mac’s Chief Economist. “However, it will be difficult to sustain the momentum in demand as unsold inventory was at near-record lows coming into the pandemic and it has only dropped since then.”
The average rate for a 30-year fixed-rate mortgage last week was 3.21% and was 3.84% during the week of June 18, 2020. The average 15-year fixed-rate mortgage was 2.58%, which is a slight decline from the prior week’s 2.62%.
Last year, the average 15-year fixed-rate mortgage was 3.25%.
Danielle Hale, Chief Economist, realtor.com, said the spring has resembled a “roller coaster ride” for mortgage rates. But it is these lower rates that are bringing buyers back to the market, especially in suburban areas.
“Despite the continued volatility, the stock market has been driving higher this week, fueled by investor optimism that economic reopening will be successful and bridge the gap until a vaccine or better treatments for COVID-19 are developed,” Hale said. “On the other hand, the Fed has adopted a cautious, supportive posture about how the economic recovery will progress. This Fed support is helping to prevent rates from rising too quickly. In fact, the Fed's recent economic projections show that the typical member expects near zero Fed funds rates through 2022.”
Hale added that the housing market is poised to play a key role in economic recovery. Also, with housing inventory declining, she added “there is plenty of room for construction to grow.”
“Our Housing Market Recovery Index shows that nationwide buyers and asking prices have made a full recovery, but sellers and time on market still have room to improve,” she said.