According to Freddie Mac, the average interest rate on a 30-year fixed-rate mortgage fell to 2.86% this week from the previous week. This is the lowest level in nearly 50 years of the mortgage giant’s survey. The 15-year fixed-rate mortgage fell to 2.37%.
Freddie Mac chief economist Sam Khater said, “The late summer in the economic recovery has led to another record drop in mortgage rates.”
These low rates have helped generate strong demand for home sales, Khater said. But he warned that it would be difficult to maintain the level of enthusiasm for buying a home.
“Going forward in the fall, it will be difficult to keep up with the pace of increase in procurement as supply shortage is already hampering sales activity,” he said.
Nevertheless, buying activity remains strong, said Joel Kahn, associate vice president of economic and industry forecasting for the Mortgage Bankers Association. Applications for new mortgages were up about 3% from the week during the week ended September 4. The average loan size continued to rise, hitting $ 368,600, the highest amount since MBA began tracking in 1990.
“Home buyers continue to offer offers on homes, pushing existing inventories to historic lows,” said George Ratiou, senior economist at Realtor.com. “Sellers get stuck in their homes, struggling to find their next home amid supply shortages, further contributing to declining inventories.”
Ritu said the limited supply of houses is pushing up prices further.
Sparking mortgage rate refinance
The new record low interest rate also has an impact on the number of homeowners who can potentially refinance their existing loans.
According to Black Knight, a mortgage data company, there are now 19.3 million high-quality refinance candidates. It is by far the largest such group, the firm reported, representing 43% of all 30-year mortgage holders
Black Knight defines high-quality refinance candidates as 30-year mortgage holders with a credit score of 720 or higher, who hold at least 20% equity in their homes, are current on their mortgage payments and who own their mortgage At least 0.75% by shaving refinance rate.
According to Black Knight, the average savings for those 19.3 million homeowners is $ 299 per month.