Mortgage rates fell below 3% in the week ending November 10, according to the latest Freddie Mac PMMS mortgage report.
The 30-year fixed-rate mortgage declined to 2.98% last week, falling 11 basis points from 3.09% the week prior. A year ago at this time, the average 30-year fixed-rate loan averaged 2.84%.
“Despite the re-acceleration of economic growth, the recent bond rally drove mortgage rates down for the second consecutive week,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “These low mortgage rates, combined with the tailwind of first-time homebuyers entering the market, means that purchase demand will remain strong into next year. However, affordability pressures continue to be an ongoing concern for homebuyers.”
The decline in rates has also led to a surge in refinancings. According to the Mortgage Bankers Association, the refi index rose 7% for the week ending Nov. 5. Although overall activity remains close to January 2020 lows, homeowners were spurred to act on the decrease in rates, he said.
Mortgage rates have remained low in large part due to the Federal Reserve’s massive monthly purchases of $120 billion in U.S. Treasury bonds and mortgage-backed securities. The Fed has said that it’s satisfied that substantial economic progress has been made in the labor market and will begin tapering its asset purchases later in November.
Although rates remain close to historic lows, market observers do expect rates to climb upward, eventually. The MBA projects that by the end of 2022, mortgage rates will approach 4%.
Economists at Freddie Mac said the 15-year fixed-rate mortgage averaged 2.27% last week, down from 2.35% the week prior. It’s actually lower than it was a year ago, at 2.34%. Similarly, the five-year ARM dropped slightly to 2.53%, down one basis point from last week. A year ago, 5-year ARMs averaged 3.11%.