The downward slide in mortgage rates produced a new milestone this week, according to Freddie Mac’s latest primary mortgage market survey.
The 30-year fixed-rate mortgage averaged 3.07 percent for the week ending July 2, down 0.06 percentage points from the week before and down 0.68 points year-over-year. It is the lowest rate on record since the survey began in 1971.
“Mortgage rates continue to slowly drift downward with a distinct possibility that the average 30-year fixed-rate mortgage could dip below 3 percent later this year,” Freddie Mac chief economist Sam Khater said in a statement.
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“On the economic front, incoming data suggest the rebound in economic activity has paused in the last couple of weeks with modest declines in consumer spending and a pullback in purchase activity,” he added.
The 15-year fixed-rate mortgage declined slightly to 2.56 percent, while the 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3 percent.
The 30-year and 15-year fixed-rate mortgages both had an average 0.8 point for the week, meaning consumers on average paid 0.8 percent of the loan amount in discount and origination fees.
Since the Federal Reserve slashed its benchmark interest rate to near zero in mid-March, the gap between the 10-year Treasury yield and the 30-year fixed-rate mortgage average has been historically large. Economists have attributed this to challenges facing the retail mortgage market, which are expected to fade in the coming months.
Falling rates have led to a boom in home loan applications in recent months, reaching an 11-year high in mid-June before falling off amid doubts about the economic recovery.