Mortgage rates hit record highs again
Mortgage rates fell to their lowest level on Thursday, weighed down by fears that the recovery of the US economy would be dampened by news coronavirus outbreaks.
The average rate on a 30-year fixed-rate mortgage fell to 3.07% from 3.13% last week, mortgage finance giant Freddie Mac said. This is the fifth time this year that America’s most popular home loan rates have hit a new low.
“The incoming data suggests that the rebound in economic activity has halted in the past two weeks with a modest drop in consumer spending and a decline in purchasing activity,” said Sam Khater, economist in chef at Freddie Mac, in a statement. It is possible that rates will fall below 3% this year, he said.
The increased capacity to process mortgages and refinances will likely prompt lenders to cut rates, said Ralph McLaughlin, chief economist at Haus, a real estate finance start-up. Earlier this year, the decline in 10-year Treasury yields, which is closely linked to mortgage rates, triggered a surge in refinancing demand. Demand overtook lenders and kept rates from falling further.
Low mortgage rates typically boost home sales, but cheap borrowing costs have so far done little to mitigate the pandemic’s impact on the housing market. Spring is generally the busiest season for home sales, but buyers have stayed home this year. Sales of existing homes fell 9.7% in May of the previous month and 17.8% in April, according to the National Association of Realtors.