Mortgage rates are up ever so slightly this week and remain close to a record low that would have seemed unthinkable only months ago, according to a closely followed survey.
The dirt-cheap rates continue to lure homebuyers out of COVID-19 lockdown and into the housing market. Demand for homes is said to be rising in all parts of the U.S. as the market mounts a strong recovery from its pandemic slump earlier this spring.
Average mortgage rates stay down in the depths
Mortgage rates have edged down this week to an average 3.18% for a 30-year fixed-rate home loan, from last week’s record-breaking 3.15%, Freddie Mac reported on Thursday.
The survey rates come with an average 0.7 point. One year ago, borrowers were finding 30-year fixed mortgages with typical rates of 3.82%.
Freddie Mac has been tracking rates for nearly half a century, and last week’s new survey low was the third in just the last few months.
“While the economy is slowly rebounding, all signs continue to point to a solid recovery in home sales activity heading into the summer as prospective buyers jump back into the market. Low mortgage rates are a key factor in this recovery,” says Sam Khater, Freddie Mac’s chief economist.
The latest survey was released ahead of Friday’s jobs reading, which showed an unexpected decline in unemployment. That positive economic news was followed by reports of rising mortgage rates, “but our expectation is that we’ve not yet seen the end of low rates,” says Realtor.com chief economist Danielle Hale.
Realtor.com has predicted that average rates “may slide under 3% by the end of the year,” and rates as low as 2.5% are already cropping up — but may you have to be a diligent comparison shopper to find them.
Low rates motivate homebuyers
Homebuyers eager to take advantage of historically low mortgage rates are shopping for homes and loans.
The Mortgage Bankers Association reported Wednesday that applications for homebuyer mortgages rose 5% last week and were up 18% from a year earlier. In mid-April, demand for those loans was down 35% from last year.
As ready they are to buy and borrow, some house shoppers are having trouble finding anything to purchase.
“While homebuyer demand is up and has been broad-based across most geographies, supply has been slower to improve,” Khater says. “In fact, the gap between supply and demand has widened even further than the large gap that existed prior to the pandemic.”