Third Week in a Row of Record Low Mortgage Rates

Freddie Mac reported the first week in July,  a 3.03% decline in the average rate on a 30-year fixed-rate mortgage. This was a dip from 3.07% the week prior and 3.13% just two weeks before.  In fact, the 30-year fixed-rate averaged around 3.75% this time last year. The 15-year fixed-rate mortgage

reported at 2.51% at the beginning of July, down from 2.56% the week ending June and 3.75% this time last year.

Since the inception of Freddie Mac’s reporting in 1971, the beginning of July 2020 ranked the lowest levels they have seen to date making this the third consecutive week of record lows. The Primary Mortgage Market Survey reported the U.S. Weekly averages as of July 16, 2020, were 2.98% for a 30-year fixed-rate mortgage, 2.48% for a 15-year fixed-rate mortgage and 3.06% for a 5/1-year ARM. Freddi Mac reports that “these low rates have been capitalized into asset prices in support of the financial markets.”

Lower rates are making homes for sale more affordable. Homebuyers are ready to buy as the shut-in orders are lifted. The National Association of Realtors released data showing a jump of 44.3 percent in May of pending home sales. In June home purchases rose 20.7% from the decrease from the pandemic. According to the NAR’s existing homes rose last month to a seasonally adjusted annual rate of 4.72 million.

“The summer is heating up as record-low mortgage rates continue to spur homebuyer demand,” said Sam Khater, Freddie Mac’s Chief Economist.

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The New Year Starts Off With Mortgage Rates Below Last Year’s Average

A new year has brought good news for the housing industry. The first week reported that the average U.S. fixed rate for a 30-year fixed mortgage averaged at a low 3.72%. The findings were 80 basis points below data reported a week earlier.

George Ratiu, Realtor.com’s chief economist said, “The conventional 30-year loan slid 2 basis points to 3.72% in the first week of 2020. Rates remain about 80 basis points lower than the first week of

2019.”

Ratiu predicts that employment and wage gains will fuel the housing industry. The economy will maintain a moderate growth trajectory this year.

The 15-year FRM also was at a low 3.16% which was down from this time last year’s reportings of 3.99%. The average rate dropped in just one week from 3.19% to 3.16%. The 5-year Treasury-indexed hybrid adjustable-rate mortgage also averaged 3.46% which was lower than the 3.98% reported this time last year.

“As mortgage rates remain favorable, buyers are likely to get a head start on the spring shopping season in the first couple of months of this year,” Ratiu said. “A stronger infusion of new homes in affordable price ranges would be a welcome gift for the New Year.”

Sam Khater, Freddie Mac’s chief economist, believes the rates have maintained around 3.7% for the last couple of months because of ” the combination of improved economic data and market sentiment has led to stability in mortgage rates.”

“The low mortgage rate environment combined with the red-hot labor market is setting the stage for a continued rise in home sales and home prices,” said Sam Khater.

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