The average rate on a 30-year fixed mortgage remained at its record-low level of 2.72 percent this week, matching a mark first achieved last week, according to Freddie Mac. The stability may be due in part to the fact that Freddie’s weekly survey came out early this week to accommodate the Thanksgiving holiday.
With the U.S. economy in recession because of the coronavirus pandemic, mortgage rates have plunged. The 15-year fixed mortgage rate also held at its lowest-ever average: 2.28 percent.
In a separate survey of rates by Bankrate, the average 30-year rate fell slightly, reaching a new record by that metric of 3.01 percent. The gap with Freddie Mac’s number is because Bankrate’s figure includes points and origination fees averaging 0.32 percent, while Freddie’s number excludes those costs. Freddie Mac said its average is accompanied by an average of 0.8 of a point.
“Mortgage rates remain at record lows and while that has fueled a refinance boom, it’s been driven mainly by higher-income borrowers. With about 20 million borrowers eligible to refinance, lower- and middle-income borrowers are leaving money on the table by not taking advantage of low rates,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “On the homebuying side, demand continues to surge, and it has created a seller’s market where inventory is at a record low and home prices are rising, beginning to offset the benefits of the low rates.”
Where do we go from here?
In the weeks and months ahead, the mortgage market may show some fluctuation, but these record-low rates probably aren’t going to last forever. Most industry watchers said between the election results and vaccine news, rates are likely to start a slow march upward, especially after a new administration is installed and the pandemic starts to subside.
In the coming week, most mortgage experts polled by Bankrate think rates will remain stable, however.
“Rates will remain unchanged. Ten-year Treasurys have held pretty steady in the 8-handle for the last week,” said Ken H. Johnson, a real estate economist at Florida Atlantic University. “Long-term mortgage rates, therefore, should remain unchanged.”