Mortgage rates this week hit record lows
Mortgage rates sank to fresh record lows this week, following the trajectory of Treasury yields depressed by economic worries.
Lenders this week were offering rates averaging 4.58% on 30-year fixed-rate loans of as much as $417,000, Freddie Mac said Thursday. That was down from 4.69% last week — the previous record low — and from 5.21% less than three months ago.
Despite sub-5% rates, the number of Americans signing contracts to buy homes plunged in May after a deadline to qualify for a popular home-buyer tax credit passed. Moreover, mortgage application data show no sign of a pickup in housing demand since then.
“The bad news is we’re driving rates down, and there’s still nothing on the housing sales side,” said Anthony Sanders, a senior scholar in real estate finance at George Mason University’s Mercatus Center.
The average rate on 15-year fixed-rate mortgages dropped to a record 4.04% from 4.13% last week.
The Freddie Mac survey, which began in 1971, asks lenders the rates they are
offering a well-qualified borrower with a down payment of at least 20% or at least that much home equity.
To get the rates offered, borrowers would have paid an average of 0.7% of the loan balance in upfront lender fees.
Despite the cheap credit, an index of applications for loans to finance home purchases fell 3.3% last week from the week before, the Mortgage Bankers Assn. said Wednesday. Applications for loans to refinance existing mortgages, however, jumped 12.6% last week to the highest level in more than a year.
In the bond market, Treasury yields have been sliding on worries about the global economy and the prospect that the U.S. could fall back into a recession.
The yield on the 10-year Treasury note, a benchmark for fixed mortgage rates, dropped below 3% this week for the first time in more than a year.
But Fannie Mae and Freddie Mac have tightened their lending standards since the housing crash. In addition to the expiration of the home-buying tax credits, unemployment remains high, depressing housing demand.
“We’ve exhausted what the government can do for the housing market,” said Sanders, who predicts another decline in home prices. “The tax credits were the last hurrah of the stimulus.”
