Mortgage rates just hit a new low for the third time this year.
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Mortgage rates hit another record-breaking low this week, dropping to a mere 3.13% on the average 30-year, fixed-rate loan. That’s the lowest rate recorded since 1971, according to Freddie Mac—and the third time a new low has been set this year.
Buyers and homeowners have noticed, too. Applications to purchase a home were up 21% over the year this week, and refinancing activity clocked in at 106% higher than last year’s numbers.
According to Sam Khater, Freddie Mac’s chief economist, Americans are just “in the buying mood.”
If you weren’t one of the many who took advantage of the recent low rates, you might be in luck. According to most experts, bargain-basement rates may be the norm for a while.
“In the first week of June, many were concerned that the good news from the May jobs report would result in rising mortgage rates,” says Mark Fleming, chief economist at First American. “While rates did jump up briefly, they have since fallen back to historic lows. The consensus among real estate and mortgage finance economists is that mortgage rates may fluctuate, but are likely to remain near historic lows through 2021.”
Freddie Mac’s economists are among those experts. The company’s latest quarterly forecast predicts 2020 to average a 3.4% rate, while 2021 will see rates drop to just 3.2%. Fannie Mae’s economists are even more optimistic, predicting a 3% rate by year’s end and a meager 2.9% at the close of 2021.
The Federal Reserve’s recent announcement to continue buying mortgage-backed securities, as well as keeping its funds rate at zero, are both contributing to this optimism.
Here’s what Litic Murali, an economist at the National Association of Home Builders, had to say about it: “With the Federal Reserve’s recent announcement of an accommodative monetary stance in order to aid recovery efforts, a low-interest-rate environment is bound to continue for the short-term, effectively benefiting housing demand.”