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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Home Purchases Are Still On the Rise

Even though we saw a slight decrease in April, home purchases are still going strong. The Mortgage Bankers Association’s (MBA) Weekly Application Survey shows that purchase activity rose 5.3% with an even higher year-over-year the week of May 29.

The ongoing economic and virus challenges didn’t stop housing demand which boasted a rise in home-buying activity compared to last year. A big part of the increase is the record low in mortgage rates. The Primary Mortgage Market Survey’s 30-year fixed-rate mortgage shows a decrease by 5 basis points which keeps the ongoing record low.

The survey shows that home purchase applications have been increasing for five consecutive weeks. In fact, the National Home Builders Association (NAHB) predicts that the housing industry will be a leading sector when it comes to the country’s economic recovery. Fannie Mae reports, “the refinance volume of applications is poised to reach a 17-year high as it forecasts mortgage rates to tumble further.”

The HMI, which indicates builders’ confidence, showed a sturdy gain in May. According to the current National Association of Home Builders/Wells Fargo Housing Market Index (HMI) when it comes to newly-built single-family homes builder confidence rose seven points to 37 last month. The HMI index also showed an increase in sales conditions to 42, a 46 for the component measuring sales expectations in the next six months and 21 for the measure charting traffic of prospective buyers.

Across the regions the HMI scores’ monthly average increased 7 points in the Midwest to 32, in the South, it rose eight points to 42 and in the West a 12 point increase to 44. The only region which saw a decrease was the Northeast which fell 2 points to 17.


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