Slight rise in mortgage rates not slowing home purchases
Even with the small increase in mortgage rates this past week, the home purchase market stayed active and should remain so for the peak buying season.
While the average for the 30-year fixed-rate mortgage was 2 basis points higher than it was a week ago, it is still 86 basis points lower than for the same week in 2019, according to Freddie Mac.
"The low mortgage rate environment continues to spur home buying activity, with applications to purchase a home up 15% from a year ago," Sam Khater, Freddie Mac's chief economist, said in a press release. "We've seen new residential construction surge over the last few months, on pace to reach the highest level in more than a decade. This is a good sign for the inventory-starved housing market and is a promising indication for the spring home buying season."
The 30-year fixed-rate mortgage averaged 3.49% for the week ending Feb. 20, slightly up from last week when it averaged 3.47%. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.35%.
There was also a 2-basis-point rise for the average 15-year fixed-rate mortgage to 2.99%, compared with last week when it averaged 2.97%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.78%.
Moving in the opposite direction was the five-year Treasury-indexed hybrid adjustable-rate mortgage, which averaged 3.25% with an average 0.2 point, down from last week when it averaged 3.28%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.84%.
Zillow's January Real Estate Market Report was also bullish on upcoming spring home purchase market.
"As the economic storm clouds on the horizon in early 2019 cleared up, we saw buyers return in droves, taking advantage of ultra-low mortgage rates," said Zillow economist Jeff Tucker in a press release.
"Our first look at 2020 data suggests that we could see the most competitive home shopping season in years, as buyers are already competing over near-record-low numbers of homes for sale. That is likely to mean more multiple-offer situations, and that buyers will have a harder time finding the perfect fit for their families.
"The good news for buyers is that low mortgage rates are helping to make home ownership more affordable, and homebuilders are responding to the hot housing market by starting construction on more homes than at any time since 2007," Tucker said.