Mortgage rates remain flat, continue to boost the housing market
Mortgage rates remained relatively flat this week, helping housing to stay as one of the bright spots in the U.S. economy during the current uncertainty, according to Freddie Mac.
The 30-year fixed-rate mortgage averaged 2.81% for the week ending Oct. 29 up slightly from last week when it averaged 2.8%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.78%.
"The record low mortgage rate environment is providing tangible support to the economy at a critical time, as housing continues to propel growth," Sam Khater, Freddie Mac's chief economist, said in a press release.
"Strong purchase demand is helping to lift the construction, manufacturing and transportation industries that build new homes and it is also leading to more consumer spending for owners, who are selling or improving their homes. On the refinance front, many consumers are smartly taking advantage of the ability to lower their monthly payment, which means they can spend, save or pay down debt more so than they have in the past."
The 15-year fixed-rate mortgage averaged 2.32%, down slightly from last week when it averaged 2.33%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.19%.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.88% with an average 0.3 point, up slightly from last week when it averaged 2.87%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.43%.
Zillow's tracker, which measures mortgage offers extended to consumers using its site, reported a drop in rates. The drop is attributed to the rise in coronavirus cases and dwindling hope for additional fiscal relief from the federal government. That in turn reduced optimism among investors, Matthew Speakman, an economist with Zillow, said in his weekly comment issued Wednesday night.
"After steadily climbing earlier in the month to reach their highest levels since June, bond yields took a sharp turn downward in recent days as investors grew more fearful of states having to implement new lockdown measures due to rapidly rising COVID-19 case volumes," Speakman said. Mortgage rates trended slightly downward, continuing a months-long trend of modest movements relative to bond yields.
"Looking beyond pandemic-specific developments, other news and data do pose risks to mortgage rates going forward. Investors are sure to react to Thursday's release of third quarter gross domestic product figures and, of course, the results of next week's federal election could certainly impact market activity."