Mortgage rates slid once again last week to just above their record lows — good news for anyone looking to buy a home or lower monthly loan payments.
The average interest rate for a 30-year fixed-rate mortgage was 3.24% with 0.7 points paid, for the week ending May 21, according to Freddie Mac. That’s just 0.01 percentage points above the all-time low of 3.23% set April 30. It is the fourth consecutive week where interest rates have remained below 3.30%.
Average interest rates on 15-year fixed-rate mortgages fell by 0.2 percentage points to 2.7% with 0.7 points paid. Meanwhile, the average rate on a 5-year adjustable-rate mortgage decreased to 3.17% with 0.4 points paid, a decline of 0.1 percentage points from last week’s 3.18%
Despite coronavirus woes, home buying activity appears to be picking up. According to data from the Mortgage Bankers Association, the Home Purchase Index — a measure of how many people are applying for mortgages as part of a home purchase — increased 6% from last week and is now just 1.5% lower than the same week a year ago. Six weeks ago the same index was 35% below last year’s levels. Government home purchase applications, including FHA, VA and USDA loans, are actually 5% higher than applications year ago.
New York continues to lead the home purchase recovery with an increase in purchase activity of 11.7%. California was up 5.7% and Washington state saw an increase of 4.7%.
On the other hand, refinance activity continues its five-week trend of decreasing applications, falling to 64.3% and down from last week’s 67%. The average refinance loan amount also fell, and could be a sign that lenders are continuing to pull back from cash-out refinances as credit conditions become tougher, according to the MBA.
Mortgage rates, which are pegged to 10-year Treasury notes, are likely to remain low for the foreseeable future, according to Freddie Mac and the MBA. Investors have been rushing to snap up 10-year Treasurys, amid uncertainty for riskier assets like stocks and corporate bonds. On Thursday yield on the 10-year note opened at 0.667%, down slightly from Wednesday’s close of 0.68%. Before March, the note’s yield had never dipped below 1%, even during the financial crisis.