U.S. mortgage rates fell to a record low for the third time since the coronavirus started roiling global markets.
The average for a 30-year fixed-rate loan was 3.15 per cent, down from 3.24 per cent last week and the lowest in Freddie Mac data going back to 1971. The previous record, 3.23 per cent, was reached last month, shattering March’s low of 3.29 per cent.
The Federal Reserve is holding its benchmark rate at near zero and buying mortgage bonds as part of its plan to stimulate the economy with cheap credit. The purchases have helped stabilize the secondary market for home loans and enabled lenders to pass lower costs on to customers.
The housing market is holding up even as sweeping job losses limit the number of Americans who can take advantage. In a sign of a rebound, the Mortgage Bankers Association’s measure of purchase-loan applications has climbed for six straight weeks, reaching the highest level since January.
April was a rough month housing demand, but buyers who didn’t lose their jobs are returning to the market to take advantage of the low mortgage rates, according to Joel Kan, an economist at the Mortgage Bankers Association.
“That’s one of the drivers,” Kan said.
At the current 30-year average rate, the monthly payment on a US$300,000 mortgage would be US$1,289. That compares with US$1,443 a year ago, when the rate was 4.06 per cent.
--With assistance from Prashant Gopal.