The average rate for a 30-year fixed-rate mortgage fell to 3.15% during the week ending May 28, bringing it to the lowest level since Freddie Mac began tracking average mortgage rates in 1971.
The government-sponsored enterprise reported the rate on Thursday when it released the results of its Primary Mortgage Market Survey. The new low represents a decline of nine basis points from the week prior and 75 basis points from the same week last year.
The previous low was 3.23%, set last month. With the coronavirus pandemic still raging and policymakers proactive about buttressing the economy, rates have remained historically low for weeks. Financial market uncertainties and the surge of forbearances triggered during earlier stages of the COVID-19 crisis had thrown a brief wrench in the works, but with volatility easing in recent weeks, mortgage rates have stabilized while trending downward — so much so that rates have seen record lows multiple times as of late.
“The 30-year fixed-rate mortgage has again hit the lowest level in our survey’s nearly 50-year history, breaking the record for the third time in just the last few months,” said Freddie Mac chief economist Sam Khater. “These unprecedented rates have certainly made an impact as purchase demand rebounded from a 35% year-over-year decline in mid-April to an 8% increase as of last week—a remarkable turnaround given the sharp contraction in economic activity.”
The low rate environment, combined with the gradual pullback of coronavirus measures across the country, has spurred many potential homebuyers to fill out loan applications. The number of purchase applications has grown for six straight weeks, per recent data from the Mortgage Bankers Association (MBA), surging 54% from early April.
Refinance activity, too, has swelled, with the MBA reporting this week that applications are up 176% from last year.
“Refinance activity remains elevated and low mortgage rates have been accompanied by a $70,000 decline in the average loan size of refinance borrowers this year,” said Khater. “This means a broader base of borrowers are taking advantage of the record low rate environment, which will benefit the economy.”