Another new record for mortgage rates: How low can they go?

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The average cost of a 30-year fixed-rate mortgage fell to 3.00 percent from last week’s 3.01 percent in Bankrate’s national survey of lenders. The 15-year fixed also set a new record, falling to 2.42 percent. Bankrate includes origination points and other fees in its figure. The 30-year fixed-rate loans in this week’s survey included an average total of 0.32 discount and origination points.

Mortgage rates have been in steady decline since the coronavirus recession began earlier this year, a trend that has helped drive the surprisingly strong housing market. However, rates ticked up a bit last month and stocks soared on optimism about the presidential election, potential vaccines for the coronavirus and an improving labor market.

The recent drop in mortgage rates reflects mixed signals from the economy. An autumn spike in coronavirus cases undermined hopeful signs that a COVID-19 vaccine soon will be available, and the economic recovery so far has been uneven and incomplete.

Jeff Lazerson of MortgageGrader expects rates to keep falling. “The mortgage and real estate businesses traditionally slow down over the holidays,” he says. “Lenders have to sharpen their pricing pencils to keep ’em coming.”

However, mortgage experts polled by Bankrate expect rates to remain the same in the coming week. Half predict rates will stay flat, although a third expect rates to rise. The 10-year Treasury yield, a key indicator for mortgage rates, flirted with 1 percent last month but was at 0.94 percent as of Wednesday.

“There is not much moving the needle at this point, and near-term lockdown concerns are still keeping everything muted,” says Gordon Miller of Miller Lending Group in Cary, North Carolina.

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Written by
Jeff Ostrowski
Senior mortgage reporter
Jeff Ostrowski covers mortgages and the housing market. Before joining Bankrate in 2020, he wrote about real estate and the economy for the Palm Beach Post and the South Florida Business Journal.
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