Mortgage rates continue to trend downward as the coronavirus pandemic's realities and uncertainty surrounding the upcoming presidential election put pressure on the market.
The 30-year fixed-rate mortgage averaged 2.8% for the week ending Oct. 22, falling one basis point from the record low set just the week prior, Freddie Mac FMCC FMCC, +2.37% reported Thursday. The new record low stands nearly a full percentage point below where rates were a year ago. During this same time in 2019, these loans had an average rate of 3.75%.
The 11th week in which mortgage rates set a new low in the roughly 50-year history of Freddie Mac's weekly mortgage rates report. On average, rates have fallen to a record low approximately once every four weeks this year.
Meanwhile, the 15-year fixed-rate mortgage decreased two basis points to an average of 2.33%, while the 5-year Treasury-indexed hybrid adjustable-rate mortgage dipped three basis points to 2.9% on average.
The continued fall in mortgage rates means that even more homeowners, including those who bought in the last few years, could save money by refinancing, said Sam Khater, Freddie Mac's chief economist.
Whether low mortgage rates are helping home buyers, on the other hand, is less straightforward. To be sure, lower interest rates make buying a home a more affordable prospect.
But low mortgage rates, especially when combined with the shortage of homes for sale, have pushed home prices much higher across the country. And there's growing evidence that climbing home prices could start moving buyers out of the market.
"With prices still rising by double-digits, buyers are finding that price gains are outpacing their wage growth and stunting their borrowing potential," said George Ratiu, senior economist at Realtor.com. "The latest mortgage applications data highlighted the growing tension, as purchases declined for the fourth consecutive week."