Mortgage rates plunge to new low in 50-year-old survey
Mortgage rates have plummeted this week to an average 3.13% for a 30-year fixed-rate home loan, from last week's 3.21%, mortgage company Freddie Mac reported on Thursday.
The new rate is the lowest ever recorded in Freddie Mac's weekly survey, which started in 1971, and this is the fourth time since early March that the company has announced a new all-time low.
The survey rates come with an average 0.8 point. One year ago, borrowers were landing 30-year fixed mortgages with typical rates of 3.84%.
Another, more frequent survey of lenders has been finding even lower average mortgage rates this month. Mortgage News Daily reported that 30-year rates sank all the way down to an unprecedented 2.94% on Thursday of last week.
And you think that's good? Smart mortgage comparison shoppers have been turning up rates as incredibly low as 2.5%.
Use the mortgage calculator below to see the low monthly payment that's possible with one of today's low mortgage rates:
How the Fed is helping push down rates
The financial markets have been on a kind of scary thrill ride over the last week: diving one day, then rising for a couple of days before stumbling again. But mortgage rates have been more stable thanks to the Federal Reserve, says Danielle Hale, chief economist at Realtor.com.
"The Fed has adopted a cautious, supportive posture about how the economic recovery will progress. This Fed support is helping to prevent rates from rising too quickly," Hale says.
In back-to-back appearances before congressional committees this week, Fed Chairman Powell warned that there's "significant uncertainty" about how long it will take for the economy will recover, and he indicated that the central bank will keep holding a key interest rate close to zero.
The Fed's policies are making the housing market one of the bright spots as the economy struggles to come back. Demand for mortgages to buy homes is the highest since January 2009, notes Sam Khater, Freddie Mac’s chief economist.
"Mortgage rates have hit another record low due to declining inflationary pressures, putting many homebuyers in the buying mood," Khater says.
And as for homeowners, they've been finding today's sunken mortgage rates irresistibly low. Demand for refinance loans surged 10% last week, and lenders were receiving more than twice as many refi applications compared to a year ago, the Mortgage Bankers Association said Wednesday.
You're considered a good refinance candidate if you can knock your mortgage rate down by at least three-quarters of a point (0.75) and if you have a credit score of at least 720. Don't know your credit score? You can easily peek at it for free.
Other mortgage rates this week
Rates on other popular types of mortgages also have fallen, Freddie Mac says.
The average for a 15-year fixed-rate mortgage has dropped to 2.58%, from 2.62% last week. Fifteen-year loans are a popular mortgage option for refinances. Those shorter-term home loans were averaging 3.25% one year ago.
And, rates on 5/1 adjustable-rate mortgages have slipped this week. Those loans are commonly known as "ARMs" and have rates that are fixed for five years and then can adjust up or down every year, in sync with a benchmark interest rate.
ARMs are currently being offered at initial rates averaging 3.09%, down from 3.10% last year. In mid-June 2019, the starter rates on those mortgages were typically 3.48%.
Take a look at today's lowest mortgage rates available where you are: