How low can they go? Mortgage rates fell to a new record low
in Bankrate’s weekly survey, which has been conducted each week for more than
30 years.
The benchmark 30-year fixed-rate mortgage, by far the most
popular choice among homeowners, fell 3 basis points to 3.30 percent. The rate
includes an average total of 0.33 discount and origination points.
Experts see mortgage rates falling even more
Rates have been falling since the start of the pandemic as
the economy plunged into a recession and the Federal Reserve cut interest
rates, pushing down the key 10-year Treasury to record lows. Mortgage rates
tend to track the 10-year Treasury.
Experts polled by Bankrate see no end in sight for low
mortgage rates.
“The virus spread continues to threaten the pace of economic
recovery, keeping a downward influence on rates,” says Greg McBride CFA, chief
financial analyst at Bankrate.
“Downward pressure on inflation should drive Treasury yields
and mortgage rates lower,” says Dick Lepre, senior loan officer at RPM Mortgage
in San Francisco. “According to the World Bank, 92.9 percent of the world’s
economies are contracting. The previous high was 83.8 percent during the Great
Depression. A synchronous recession of this scale has never happened before. In
2020, global GDP per capita will experience its largest decline since 1945.”
Loan applications, home sales are up
Homebuyers and refinancers have been inundating lenders with
loan requests. Mortgage applications fell 0.8 percent last week after climbing
for the previous three weeks in a row, according to the Mortgage Bankers
Association.
Even still, the unadjusted purchase index rose 21 percent
compared with last year, and the index has risen 10 straight weeks comparing
year over year, MBA reported.
Meanwhile, pending home sales continued to climb in June, up
16.6 percent over May, and rising 6.3 percent compared with June 2019, the
National Association of Realtors reported today. That’s a remarkable increase
considering much of the country was shut down in June due to the pandemic.
“It is quite surprising and remarkable that, in the midst of
a global pandemic, contract activity for home purchases is higher compared to
one year ago,” said Lawrence Yun, NAR’s chief economist. “Consumers are taking
advantage of record-low mortgage rates resulting from the Federal Reserve’s
maximum liquidity monetary policy.”
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