Mortgage Rates Hit Record Lows During July, 2020
Dipping Below 3% to 2.98% on July 16, 2020
Ending at 3.01% on July 23, 2020
Interest Rates Drop for 3 Consecutive Weeks
Over the past several weeks, Freddie Mac has reported the average 30-year fixed mortgage rate dropping to record lows, all the way down to 2.98% on July 16, 2020. Last week’s reported rate reached the lowest point in the history of the survey, which dates back to 1971 (See graph above). July 23rd average rate edged up to 3.01%, after 3 weeks of consecutive drops.
“While housing demand continues to rebound, the month-long swoon in economic activity has caused the 10-year Treasury benchmark to drop. In the short-term, this means the demand will continue on the back of near record low mortgage rates,” said Sam Khater, Freddie Mac’s Chief Economist. “However, the most recent consumer spending data has been pointing to slow growth since mid-June. The concern is that the pause in economic activity will cause unemployment to remain elevated which will lead to longer-term labor market distress.”
What does this mean for buyers?
Those currently taking advantage of the increasing affordability that comes with historically low interest rates are winning big – this is great for home buyers.
According to Sam Khater, Chief Economist at Freddie Mac:
“The summer is heating up as record low mortgage rates continue to spur homebuyer demand.”
In addition, move.com notes:
“Summer home buying season is off to a roaring start. As buyers flooded into the market, realtor.com® monthly traffic hit an all-time high of 86 million unique users in June 2020, breaking May’s record of 85 million unique users. Realtor.com® daily traffic also hit its highest level ever of 7 million unique users on June 25, signaling that despite the global pandemic buyers are ready to make a purchase.”
Clearly, buyers are capitalizing on today’s low rates. As shown in the chart below, the average monthly mortgage payment decreases significantly when rates are as low as they are today.
A lower monthly payment means savings that can add up significantly over the life of a home loan. It also means that qualified buyers may be able to purchase more home for their money. Maybe that’s a bigger homes than what they’d be able to afford at a higher rate, an increasingly desirable option considering the amount of time families are now spending at home given today’s health crisis.
If you’re in a position to buy a home this year, let’s connect to initiate the process while mortgage rates are historically low.