There have now been 17 consecutive weeks when average mortgage rates have been below 3%.
The average U.S. mortgage rate for a 30-year fixed loan fell this week to 2.72%, Freddie Mac said in a report on Thursday – the lowest rate in the survey’s near 50-year history. This week’s rate broke the previous record set on Nov. 5 by 6 basis points.
The average fixed rate for a 15-year mortgage also fell by 6 basis points to 2.28%.
After this week’s record drop, there have now been 17 consecutive weeks when average mortgage rates have been below 3%. This also marks the first time in the survey’s history rates have fallen below 2.75%, and the 13th time this year rates have broken a record.
According to Sam Khater, Freddie Mac’s chief economist, weaker consumer spending data, which accounts for the majority of economic growth, drove mortgage rates to its new record low.
“While economic growth remains unstable, strong housing demand continues to have a domino effect on many other segments of the economy,” Khater said.
To prevent a credit crunch and make borrowing cheaper, the Federal Reserve started buying bonds – Treasuries and mortgage-backed securities – in March.
Now, these highly favorable mortgage rates are continuing to bring fresh buyers to the market, said National Association of Realtors chief economist, Lawrence Yun. As a result, Yun said home prices are increasing far too quickly, which may prove difficult for first-time buyers trying to come up with a down payment.
October’s housing starts data from the Census Bureau revealed construction is attempting to keep up with that heightened demand as starts rose 4.9% to a seasonally adjusted annual pace of 1.53 million – the highest since this February.
When construction will finally catch up with record low rates is still up in the air, but in September, 13 members of the Federal Reserve’s Federal Open Market Committee said they expect to keep the central bank’s benchmark rate near zero through 2023.
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