The average mortgage rate on America’s most popular home loan has hit another record-setting low.
The rate on the 30-year mortgage fell to 2.88 percent, the lowest rate in 50 years, Bloomberg reported, citing Freddie Mac. Rates have dropped eight times during the pandemic. Last month, the rate fell below 3 percent for the first time, registering at 2.98 percent.
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Mortgage rates are sub-3%. How will buyers and lenders react?
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Jumbos now cost more than traditional mortgages
The lower rates are “giving potential buyers more purchasing power and strengthening demand,” said Sam Khater, chief economist at Freddie Mac.
The Federal Reserve has kept its benchmark rate at near zero since the start of the pandemic, in an effort to soften the effects of the economic disruption. The low cost of financing has spurred new mortgage applications, which has inundated lenders with new requests for financing.
“This is definitely helping affordability,” said Tendayi Kapfidze, chief economist at LendingTree. “It’s also attracting a lot of people into the market who otherwise might not have been so quick to act.”
But not all home loan rates have seen such a steep decline. Mortgage rates for jumbo loans, which are typically used for luxury houses that do not meet conventional mortgage standards, have fallen to only 3.5 percent. It’s the first time in five years that the rates on jumbo loans have exceeded smaller, more traditional home financing options. [Bloomberg] — Georgia Kromrei