Despite the slight rise in rates, homebuyer demand remains strong, according to Redfin Chief Economist Darryl Fairweather.

After hitting an all-time low last week, mortgage rates ticked slightly up this week, according to the latest data released Thursday by Freddie Mac. The average 30-year fixed-rate mortgage was 3.36 percent over the past week, up from last week’s 3.29 percent rate.

“As refinance applications continue to surge and lenders work to manage capacity, the 30-year fixed-rate mortgage ticked up from last week’s all-time low,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “Mortgage rates remain at extraordinary levels and many homeowners are smartly weighing their options to refinance, potentially saving themselves money.”

Mortgage chart courtesy Freddie Mac

The 15-year fixed-rate mortgage averaged 2.77 percent, down slighty from last week’s 2.79 percent. It’s nearly an entire percent lower than last year’s average rate this week of 3.76 percent. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.01 percent, down from last week’s 3.18 percent and down from the 3.84 percent it was this week, last year.

Part of the reason that rates haven’t plummeted mirroring the drop in the Treasury yield is that mortgage companies are dealing with increased demand for new mortgages and re-finances. Anthony Hsieh, the CEO of loanDepot, warned this would be the case last week, when he said this would be the biggest re-finance rally in history.

“The current market conditions can create exceptional opportunities for consumers,” said Hsieh. “But I think it’s going to be critical for consumers to be very knowledgeable and, importantly, very patient.”

“The analogy I would use is this: when you are using shared Wi-Fi at an airport, sometimes speed can be slowed because everyone around you is trying to use the same services,” Hsieh added. “This market is unpredictable, but upcoming capacity demand for refinance may create a similar, slowed experience.”

Even with rates moving slightly upward, they’re still near historic lows. And despite fears over the spread of COVID-19 (coronavirus) and a plummeting stock market — the Dow Jones was down more than 1,700 points, or 7.39 percent at 11 a.m., on Thursday — homebuyer demand remains strong, according to Redfin Chief Economist Daryl Fairweather.

“For now, low rates are overpowering headwinds from stock market declines and coronavirus concerns,” Fairweather said. “A homeowner who can afford to spend $2,500 on a monthly mortgage can spend about $50,000 more on a home today compared to this time last year when rates were over 4 percent.”

“The boost in purchasing power comes at a welcome time for homebuyers who have been facing major inventory crunches and intense bidding wars in many markets,” Fairweather added. “Despite there being fewer homes for sale in most markets this year, Redfin found the share of homes that were affordable on a $2,500 monthly payment increased 1.9 percentage points nationally last week compared to the same week in 2019.”

Email Patrick Kearns

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