How low can they go? Mortgage rates fell to a new record low in Bankrate’s weekly survey, which has been conducted each week for more than 30 years.
The benchmark 30-year fixed-rate mortgage, by far the most popular choice among homeowners, fell 3 basis points to 3.30 percent. The rate includes an average total of 0.33 discount and origination points.
Experts see mortgage rates falling even more
Rates have been falling since the start of the pandemic as the economy plunged into a recession and the Federal Reserve cut interest rates, pushing down the key 10-year Treasury to record lows. Mortgage rates tend to track the 10-year Treasury.
Experts polled by Bankrate see no end in sight for low mortgage rates.
“The virus spread continues to threaten the pace of economic recovery, keeping a downward influence on rates,” says Greg McBride CFA, chief financial analyst at Bankrate.
“Downward pressure on inflation should drive Treasury yields and mortgage rates lower,” says Dick Lepre, senior loan officer at RPM Mortgage in San Francisco. “According to the World Bank, 92.9 percent of the world’s economies are contracting. The previous high was 83.8 percent during the Great Depression. A synchronous recession of this scale has never happened before. In 2020, global GDP per capita will experience its largest decline since 1945.”
Loan applications, home sales are up
Homebuyers and refinancers have been inundating lenders with loan requests. Mortgage applications fell 0.8 percent last week after climbing for the previous three weeks in a row, according to the Mortgage Bankers Association.
Even still, the unadjusted purchase index rose 21 percent compared with last year, and the index has risen 10 straight weeks comparing year over year, MBA reported.
Meanwhile, pending home sales continued to climb in June, up 16.6 percent over May, and rising 6.3 percent compared with June 2019, the National Association of Realtors reported today. That’s a remarkable increase considering much of the country was shut down in June due to the pandemic.
“It is quite surprising and remarkable that, in the midst of a global pandemic, contract activity for home purchases is higher compared to one year ago,” said Lawrence Yun, NAR’s chief economist. “Consumers are taking advantage of record-low mortgage rates resulting from the Federal Reserve’s maximum liquidity monetary policy.”