Jun 19, 2020
While we adhere to strict editorial guidelines, partners on this page may provide us earnings.
Mortgage rates keep rewriting the record books. Mortgage giant Freddie Mac says rates on 30-year fixed-rate mortgages dropped this week to an all-time low in its survey that goes back nearly 50 years — and it's the fourth time that's happened since early March.
Freddie Mac says the typical 30-year rate has dipped to 3.13%, but a survey of lenders from Mortgage News Daily found that average rates plunged below 3% for the first time ever earlier this month.
Advertisement
Will rates keep going down, down, down? As that Magic 8 Ball says, "Signs point to yes" — but experts say don't take ultra-low rates for granted.
The case for even lower rates
Long-term mortgage rates take their cues from the interest on Treasury bonds, and those yields have dwindled as a shaky stock market has sent investors running to bonds.
The yields are so spectacularly low that personal finance celebrity Suze Orman said in a recent podcast that "you have to be crazy, if you ask me, to be in bonds at this point in time."
Stocks took a hit this week from reports of rising coronavirus cases in many parts of the country. Investors were left worrying about the economy's ability to recover anytime soon, explains Matthew Speakman, an economist with Zillow.
"This sparked a sell-off in stocks and a flight to the safe haven of bonds — something that normally pushes mortgage rates lower," Speakman says.
Advertisement
In a new forecast, mortgage company Fannie Mae expects average 30-year mortgage rates will keep dropping — to 3.0% by the end of this year and to just 2.9% during all of 2020.
Fannie Mae chief economist Doug Duncan says extremely cheap mortgage rates will continue to please homebuyers, and homeowners looking for refinance savings.
"We ... expect the extremely low mortgage rate environment to contribute to historically high levels of refinancing activity as household balance sheets and incomes improve," Duncan says, in a news release.
During appearances before Congress this week, Federal Reserve Chairman Jerome Powell raised new alarms about the economic threat from the coronavirus and promised that the Fed would continue to hold its benchmark interest rate near zero. The Fed's low-rate environment is helping to keep mortgage rates in the cellar.
Must Read
- You can now build wealth like a landlord for as little as $100 — and no, you don't have to chase down rent or take 3 A.M tenant calls
- Goldman Sachs used to hoard prime real estate deals for the ultrarich. Two ex-analysts just opened the door for $250
- Robert Kiyosaki begs investors not to miss this ‘explosion’ — says this 1 asset will surge 400% in a year
Join 250,000+ readers and get Moneywise’s best stories and exclusive interviews first — clear insights curated and delivered weekly. Subscribe now.
The potential for rising rates
Freddie Mac also has come out with a new mortgage rates outlook, but it's not quite as tantalizing as Fannie Mae's.
Advertisement
Though Freddie Mac chief economist Sam Khater says rates "should remain at record lows for the foreseeable future," the forecast predicts 30-year rates will average 3.4% this year and 3.2% in 2021.
In the near term, we may have reached a turning point for mortgage rates, says Zillow's Speakman.
"More bad news regarding the uptick in coronavirus cases would likely send rates back downward, possibly to new lows. However, rates could just as easily begin to trend upward again, particularly if key economic data or measures to contain or treat the virus show meaningful improvements," he says.
That means if you're thinking about buying a home or refinancing, don't try to "time the market" and wait for the perfect mortgage rate, because rates could easily move in either direction.
Compare rates from a bunch of lenders, and if you find one that looks remarkably low and would work well for you, apply for the loan and work with the lender to lock the rate — so it doesn't slip from your grasp.
You May Also Like
- Dave Ramsey warns nearly 50% of Americans are making 1 big Social Security mistake — here’s what it is and the simple steps to fix it ASAP
- Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how
- Millionaires under 43 are reshaping investing — just 25% of their portfolios are in stocks. Here’s where their money is going
- Robert Kiyosaki issues grim warning for baby boomers. Many could be ‘wiped out’ and homeless ‘all over’ the country. How to protect yourself now
Doug Whiteman was formerly the editor-in-chief of MoneyWise. He has been quoted by The Wall Street Journal, USA Today and CNBC.com and has been interviewed on Fox Business, CBS Radio and the syndicated TV show "First Business."
Mortgages • Apr 17
What is a home equity line of credit (HELOC)?
Mortgages • Mar 19
