Mortgage Interest Rates Fall Below 3% for the First Time in 50 Years
If you are looking to buy a new house, now is a good time to consider getting a mortgage — as Freddie Mac reports mortgage rates have fallen below 3% for the first time in 50 years.
The housing market is back — and then some.
Low Interest Rates
The average interest rate for a 30 year fixed-rate mortgage dropped below 3%, as the Federal Home Loan Mortgage Corporation, Freddie Mac reported yesterday, settling in at 2.98% for the week that ended July 16th.
For comparison, a year ago the 30-year fixed-rate mortgage averaged 3.81%.
The 15 year fixed-rate mortgage averaged 2.48%, down from last week when it averaged 2.51%.
A year ago the 15 year fixed-rate mortgage loan averaged 3.23%.
This is the first time since Freddie Mac began tracking mortgage rates in 1971 that the rate on the 30-year mortgage dropped below 3%.
“Mortgage rates fell below 3% for the first time in 50 years. The drop has led to increased home buyer demand and, these low rates have been capitalized into asset prices in support of the financial markets,” said Sam Khater, Freddie Mac’s Chief Economist.
And many economists predict that mortgage rates will remain below that threshold into 2021.
A new economic forecast by Fannie Mae projects that the 30-year fixed-rate mortgage will average 2.8% next year.
And economists at Realtor.com reports in their national housing forecast for 2020 that rates will average 3.2% throughout the year but hit 2.9% by the end of the year.
“Yes, mortgage rates below 3% are possible,” said Danielle Hale, chief economist at Realtor.com.
However, Sam Khater, Freddie Mac’s Chief Economist, also cautions against becoming overly optimistic at this time, also saying in the statement, “…the countervailing force for the economy has been the rise in new virus cases which has caused the economic recovery to stagnate, and this economic pause puts many temporary layoffs at risk of ossifying into permanent job losses.”
Yet with such low interest rates, even those who were thinking of waiting it out over time are now stepping out to lock in an unprecedented 50 year low mortgage, as mortgage applications for June 2020 new home purchases increased 54.1% compared from a year ago, reported the Mortgage Bankers Association (MBA).