Mortgage Rates Dive to a Record New Low in the U.S.

Mortgage Rates According to Freddie Mac:

If you’re a homebuyer, beware that home Mortgage loan rates are continuing to trend downwards, raising the possibility of sub-3% later this year. Economic data from the week suggested that economic activity has slowed in the last couple of weeks. This was reportedly reflected in consumer spending and purchase activity. By contrast, consumer confidence is on the rise according to the Consumer Confidence Index. The CB Consumer Confidence Index is up from 85.9 to 98.1. While these stats are skewed to the positive, the continued rise in new COVID-19 cases has raised more red flags. In recent weeks, a number of U.S states have hit the pause button on reopening. This could ultimately slow the pace of hiring and the economic recovery, as the U.S unemployment rate fell from 13.3% to 11.1%.

Freddie Mac Rates

The weekly average rates for new mortgages as of 2nd July quoted by Freddie Mac are as follows:

• 30-year fixed rates fell by 6 basis points to 3.07% in the week. Rates were down from 3.75% from a year ago. The average fee also remained unchanged at 0.8 points.
• 15-year fixed decreased by 3 basis points to 2.56% in the week. Rates were down from 3.18% compared with a year ago. The average fee remained unchanged at 0.8 points.
• 5-year fixed rates slid by 8 basis points to 3.00% in the week. Rates were down by 45 points from last year’s 3.45%. The average fee decreased from 0.5 points to 0.3 points.

Mortgage Banker’s Association Rates

For the week ending 26th June, rates the MBA’s rates were quoted as follows:

• Average interest rates for 30-year fixed, backed by the FHA, increased from 3.35 to 3.43%. Points increased from 0.22 to 0.36 (incl. origination fee) for 80% LTV loans.
• Average interest rates for 30-year fixed with conforming loan balances declined from 3.30% to 3.29%. Points rose from 0.32 to 0.36 (incl. origination fee) for 80% LTV loans.
• Average 30-year rates for jumbo loan balances decreased from 3.62% to 3.59. Points increased from 0.29 to 0.31 (incl. origination fee) for 80% LTV loans.

Weekly figures released by the Mortgage Bankers Association showed that the Market Composite Index, which is a measure of mortgage loan applications filed by volume, declined by 1.8% in the week ending 26th June. In the week prior, the Index had fallen by 8.7%.

The Refinance Index decreased by 2% and was up by 74% from the same week as a year ago. The Index had slid by 12% in the previous week.

The refinance share of mortgage activity fell from 61.3% to 61.2% of total applications in the week ending 26th June. In the week prior, the share had decreased from 63.2% to 61.3% of total applications.

According to the MBA’s Stats:

• Mortgage applications fell last week in spite of mortgage rates hitting another record low.
• Investors contemplated the risks of the recent resurgence of COVID-19 cases to the labor market and the economy.
• Following 2-months of strong growth, purchase applications declined for a 2nd consecutive week in a row.
• The decline is potentially a signal that pent-up demand is beginning to wane, due to the COVID19 spike coupled with low housing supply limiting buyer’s options.
• Tighter inventories look to be leading to fast price growth of homes, reflected by a record-high increase in the average purchase application loan size.

Contact one of our loan consultants to learn more.