Mortgage rates at new low, likely to fall further

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Mortgage rates reached their lowest level this week since Freddie Mac began its Primary Mortgage Market Survey in 1971, but they might not have yet gotten to their floor.

"Mortgage rates continue to slowly drift downward with a distinct possibility that the average 30-year fixed-rate mortgage could dip below 3% later this year," Sam Khater, Freddie Mac's chief economist, said in a press release. "On the economic front, incoming data suggest the rebound in economic activity has paused in the last couple of weeks with modest declines in consumer spending and a pullback in purchase activity."

The 30-year fixed-rate mortgage averaged 3.07% for the week ending July 2, down from 3.13%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.75%.

The 15-year fixed-rate mortgage averaged 2.56%, down slightly from last week when it averaged 2.59%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.18%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3% with an average 0.3 point, down slightly from last week when it averaged 3.08%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.45%.

The week-to-week decline in rates can be attributed to investors' reacting to the increase in coronavirus cases in places like Florida, Louisiana, Texas and California.

"Mortgage rates fell back to all-time lows this week as the market continues to weigh the economic risks posed by recent surges in COVID-19 case counts. The downward movements in rates were very consistent this week, with rates showing modest improvements each of the last five business days," Matthew Speakman, a Zillow economist, said in a statement released Wednesday night.

"The steady declines suggest that investors are keeping a very close eye on coronavirus case counts and keenly awaiting evidence of how the economy responds as a result of the outbreak. If the uptick in cases does indeed prevent states or cities from continuing their plans to reopen, or even prompt more closures, then rates would likely plunge further and reach new lows. But, if the economy can withstand this recent wave and continue its slow reversion to 'normal,' then rates would likely head back upward. June's jobs report will be the first referendum on the economy's resilience to the recent outbreak, and it's likely that rates will react to the news one way or another."

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Mortgage rates forecast Mortgage rates Freddie Mac Economy Zillow Coronavirus