Mortgage Rate Sink To Another Record Historic Low

The 30-year fixed rate is at its lowest level since Freddie Mac began tracking mortgage rates in 1971. This is the sixth time the 30-year fixed rate has fallen to a new low in the past several months.

“With rates now at all-time historic lows, it’s hard to imagine that people may be holding out for something even better," Paul Buege, president and COO of Inlanta Mortgage in Pewaukee, Wis., said in an email.

According to the latest data released by Freddie Mac, the 30-year fixed-rate average fell to a historic low of 3.03 percent with an average 0.8 point. (Points are fees paid to a lender equal to 1 percent of the loan amount and are in addition to the interest rate). Since November 2018 when it was 4.94 percent, it has fallen nearly 2 percentage points.

Freddie Mac, the federally chartered mortgage investor, aggregates rates from 125 lenders across the country to come up with national average mortgage rates. The rates are based on borrowers with excellent credit scores. These rates are not available to every borrower.

The 15-year fixed-rate average dropped to 2.51 percent with an average 0.8 point. It was 3.22 percent a year ago.

“Investors appear to be hanging tight, waiting for surprising data and/or evidence of our society’s ability to function — or not function — amid rising COVID-19 case volumes before acting in a way that would force mortgage rates to respond,” Speak man said. “Absent this information, it’s difficult to call where rates are likely to go from here.”

Meanwhile, home buyers came back into the market pushing mortgage applications. According to the latest data from the Mortgage Bankers Association, the market composite index — a measure of total loan application volume — increased 2.2 percent from a week earlier. The purchase index was up 5 percent from the previous week and was 33 percent higher year-over-year. The refinance index was flat, inching up 0.4 percent but was 111 percent higher than a year ago. The refinance share of mortgage activity accounted for 60.1 percent of applications.

Purchase applications continued their recovery, increasing 5 percent to the highest level in almost a month and 33 percent from a year ago. The average purchase loan size increased to $365,700 — also another high — as borrowers contend with limited supply and higher home prices.”

Lower rates continue to increase affordability for buyers and refinancing homeowners, Morgan said. For example, on a $300,000 loan, the monthly payment including principal, interest and estimated taxes and insurance would be $1,298 this week compared to $1,448 at this time last year.

Record-low mortgage rates and households unaffected by the widespread unemployment in some job sectors are fueling the uptick in home buyer demand,” Bob Broeksmit, president and CEO of the Mortgage Bankers Association, said in a statement. 

Source: The Washington Post – July 9,2020