Home loans are more affordable than ever, providing that you can find a willing lender.
The average rate on 30-year fixed mortgages has dropped to 2.99% in the last week of July, according to the Primary Mortgage Market Survey results released by Freddie Mac this Thursday. For comparison, the 30-year fixed-rate average stood at 3.75% a year ago. Two weeks ago, it was at 2.98% and it rose to 3.1% last week.
Freddie Mac started conducting nationwide surveys of mortgage rates in 1971. This is the first time the key rate has slipped below 3% since this government-backed mortgage finance firm published its first survey results.
Additionally, the average rate on 15-year fixed mortgages fell to 2.51% over the last week of July. It was 2.54% a week ago and stood at a much higher 3.20% a year ago. The average five-year adjustable rate slid to 2.94%. Just a week ago it was 3.09% and in July 2019 it was 3.46%.
The Federal Reserve’s recent efforts to inject trillions of dollars into financial markets to help the economy recover from the effects of the global health crisis have been one of the main reasons behind the mortgage rates nearing historic minimums.
Low mortgage rates helped jumpstart the housing market revival after the Great Recession and are expected to do the same these days – at least in theory. In practice, they’ve been more of a source of frustration. The conditions are far from ideal both for homebuyers and homeowners. Homebuyers hope to take advantage of the low rates but the scarce selection of homes on the market is driving up housing prices. Homeowners wish to refinance their loans but have difficulties reaching banks and lenders because of how swamped they are.
In addition, as attractive as these mortgage rates may be to borrowers, only a select few can actually obtain them. Many lenders are announcing stringent loan requirements and numerous restrictions, especially for poor-credit borrowers applying for cash-out refinancing or jumbo loans.
Still, the housing market is booming. “It’s Groundhog Day in the mortgage market as rates continue to remain near historic lows, driving purchase demand over 20% above a year ago,” said Freddie Mac’s Chief Economist, Sam Carter.
According to data from ShowingTime, a company that manages bookings for most US home showings, not only did June see record sales, but the number of home showings grew by 14.5% compared to May.