Freddie Mac [1] this week released the results of its Primary Mortgage Market Survey [2](PMMS), showing that the 30-year fixed-rate mortgage (FRM) averaged 2.86%, the lowest rate in its survey’s history, which dates back to 1971.
“Mortgage rates have hit another record low due to a late summer slowdown in the economic recovery,” said Sam Khater, Freddie Mac’s Chief Economist. “These low rates have ignited robust purchase demand activity, which is up 25% from a year ago and has been growing at double-digit rates for four consecutive months. However, heading into the fall it will be difficult to sustain the growth momentum in purchases because the lack of supply is already exhibiting a constraint on sales activity.”
News Facts
- 30-year fixed-rate mortgage [3] averaged 2.86 percent with an average 0.8 point for the week ending September 10, 2020, down from last week when it averaged 2.93 percent. A year ago at this time, the 30-year FRM averaged 3.56 percent.
- 15-year fixed-rate mortgage [3] averaged 2.37 percent with an average 0.7 point, down from last week when it averaged 2.42 percent. A year ago at this time, the 15-year FRM averaged 3.09 percent.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage [3] (ARM) averaged 3.11 percent with an average 0.2 point, up from last week when it averaged 2.93 percent. A year ago at this time, the 5-year ARM averaged 3.36 percent.
Realtor.com [4]'s Senior Economist, George Ratiu attributed the record low rate to "investors moving away from the sharp volatility in equity markets and towards the relative safety of bonds."
He added, "low rates continue to provide strong tailwind for real estate markets, stoking demand. Homeowners have been taking advantage by refinancing their existing loans and locking in a lower monthly payment as a hedge for an uncertain future. Home buyers continue placing offers on homes pushing existing inventory toward historic lows. Would-be sellers are stuck in their homes, struggling to find their next house amid a dearth of supply, further contributing to the decline in inventory. The market imbalance is pushing prices close to 11% higher compared to a year ago, an advance which is beginning to erode the benefits of lower mortgage rates. For many young, first-time buyers, the shift is reducing affordability, just as they are ready to embrace homeownership.”
More about the report: The PMMS is focused on conventional, conforming, fully-amortizing home purchase loans for borrowers who put 20 percent down and have excellent credit. Average commitment rates should be reported along with average fees and points to reflect the total upfront cost of obtaining the mortgage. Visit the following link for the Definitions [5]. Borrowers may still pay closing costs which are not included in the survey.