WASHINGTON–The average rate in the U.S. on the 30-year mortgage has once again hit an historic low.
Freddie Mac released data this week showing the 30-year fixed rate average decline to a record low 3.07% with an average 0.78 point. That’s down from 3.13% one week earlier and 3.75% one year earlier.
The 30-year fixed rate is at its lowest level since Freddie Mac began tracking mortgage rates in 1971, surpassing the previous low set in June of 3.13%. This is the fifth time the 30-year fixed rate has fallen to a new low in the past several months, according to Freddie Mac.
The average rate is calculated based on rates from 125 lenders across the U.S. for borrowers with strong credit scores.
The 15-year fixed-rate average also declined, dropping to 2.56% with an average 0.8 point, according to Freddie Mac. That’s down from 2.59% a week ago and 3.18% a year ago. The five-year adjustable-rate average fell to 3% with an average 0.3 point. The 15-year stood at 3.08% a week ago and 3.45% one year earlier.
Rates Could Go Lower
“Mortgage rates fell back to all-time lows this week as the market continues to weigh the economic risks posed by recent surges in covid-19 case counts,” Matthew Speakman, a Zillow economist, told the Washignton Post. “The steady declines suggest that investors are keeping a very close eye on coronavirus case counts and keenly awaiting evidence of how the economy responds as a result of the outbreak. If the uptick in cases does indeed prevent states or cities from continuing their plans to reopen, or even prompt more closures, then rates would likely plunge further and reach new lows.”
Preetam Purohit, head of hedging and analytics at Embrace Home Loans, in Middletown, R.I., told the Washington Post his company expects rates to stabilize between 3% and 3.125% in the near future on the 30-year mortgage, but he added, it “has the potential to gradually decline to 2.75% over the next six months.”
Bankrate.com said half of the lending experts it surveyed expect rates will be about the same in the coming week.
Mortgage App Decline
Meanwhile, while rates have declined mortgage applications actually decreased last week, according to the latest data from the Mortgage Bankers Association. The MBA’s market composite index — a measure of total loan application volume — decreased 1.8% from a week earlier.
The purchase index fell for the second week in a row. It was down 1% from the previous week and was 15% higher year-over-year, the MBA said. The refinance index slipped 2% and was 74% higher than a year ago. The refinance share of mortgage activity accounted for 61.2% of applications, according to the MBA.
New Wave Projected
At least one company is projecting a wave of refinancings is on its way. CoreLogic, noting Americans refinanced nearly two-million home loans from January through April, more than double the same four-month stretch in 2019, noted cash-out refinancings have also risen more than 70% from a year earlier.
“The refi share is through the roof,” Frank Nothaft, chief economist at CoreLogic, told ABC News. “It’s way up from a year ago and it’s accounting for the bulk of lending.”
Through the first four months of the year, about 1.9 million mortgages with a dollar value of $576.09 billion were refinanced, according to CoreLogic. They accounted for 64% of home loans during that period, the firm said. Of those, cash-out refinancings made up about 15% of all loans, said ABC News.