Mortgage rates notch new low

Momentum may be “difficult to sustain” heading into the fall, according to Freddie Mac

National /
Sep.September 11, 2020 10:40 AM
The rates for a 30-year fixed-rate mortgage dropped 7 percentage points for the week ending September 10, reaching 2.86 percent. (iStock)

The rates for a 30-year fixed-rate mortgage dropped 7 percentage points for the week ending September 10, reaching 2.86 percent. (iStock)

Mortgage rates sank to an all-time low — again.

The average rate for a 30-year fixed-rate mortgage dropped .07 percentage points for the week ending Sept. 10, reaching 2.86 percent — a new low since Freddie Mac began conducting the survey in 1971. This time last year, the mortgage rates averaged 3.56 percent. Fifteen-year mortgages declined, too, to an average of 2.37, while five-year mortgages were up 18 percentage points to 3.11.

(Source: GlobalNewswire)

(Source: GlobalNewswire)

Sam Khater, Freddie Mac’s chief economist, said a late summer slowdown in the economic recovery was to thank for the low mortgage rates, but that might not hold through the fall, when a lack of supply could drive up prices and deter homebuyers.

“These low rates have ignited robust purchase demand activity, which is up 25 percent from a year ago and has been growing at double digit rates for four consecutive months,” said Khater. “However, heading into the fall it will be difficult to sustain the growth momentum in purchases because the lack of supply is already exhibiting a constraint on sales activity.”

The survey covers only conventional mortgages, where borrowers have excellent credit and make a 20 percent down payment. Jumbo loans, which are typically reserved for luxury homes which exceed the federal housing agency purchase price limit, are not included.

Since the Federal Reserve lowered its benchmark rate in mid-March, and later signaled the rate would stay low for the long haul, mortgage rates have reached historic lows — although not as low as expected. The gap between the 10-year treasury yield and the 30-year fixed-rate mortgage rate is at its widest since 2008.

Still, the historically low mortgage rates have led to a frenzy of homebuying, and even a rebound for timber real estate investment trusts, responding to the higher demand for lumber. The average home price also broke the $300,000 mark for the first time in July.

Existing home sales were up 24.7 percent in July, according to the National Association of Realtors, after two consecutive months of gains.


Related Articles

arrow_forward_ios
Home flips are at their lowest since 2003 while big money is pouring in from investors looking for fixer-uppers. (iStock)
Investors gobble up fixer-uppers despite scarce inventory
Investors gobble up fixer-uppers despite scarce inventory
Pittsburgh is the place to be for affordable mortgage payments. San Jose and San Francisco? Not so much. (iStock)
Ten most/least expensive cities to buy a median-priced home
Ten most/least expensive cities to buy a median-priced home
Real estate stocks climbed higher in August despite the end of a national eviction moratorium and uncertainty over how the delta variant would affect retail spending and a return to the office. (iStock)
Real estate stocks dodge obstacles, charge forward in August
Real estate stocks dodge obstacles, charge forward in August
A statistical analysis found that lenders were 80 percent more likely to reject Black applicants for mortgages in 2019. (iStock)
Secret bias in mortgage algorithms hurts borrowers of color
Secret bias in mortgage algorithms hurts borrowers of color
From left: JPMorganChase CEO Jamie Dimon, Goldman Sachs CEO David Solomon and Morgan Stanley CEO James Gorman (Getty)
Demand for private-label mortgages on the rise
Demand for private-label mortgages on the rise
Rocket Companies originates record home purchase mortgages despite industry headwinds
Rocket Companies originates record home purchase mortgages despite industry headwinds
Rocket Companies originates record home purchase mortgages despite industry headwinds
Divvy Homes CEO Adena Hefets (Twitter)
Divvy Homes hits $2B valuation on new fundraising round
Divvy Homes hits $2B valuation on new fundraising round
Fannie Mae CEO Hugh Frater (Fannie Mae, iStock)
Fannie Mae to count rent payments toward mortgage approval process
Fannie Mae to count rent payments toward mortgage approval process
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...