The average 30-year mortgage hit a new all-time low of 3.07 percent this week, according to data from Freddie Mac released Thursday.

Mortgage rates reached a stunning new all-time-low heading into the July 4th holiday weekend, according to the latest data released Thursday by Freddie Mac. The average rate for a 30-year fixed-rate mortgage averaged 3.07 percent, down from 3.13 percent the week prior and 3.75 percent a year ago this time.

Sam Khater | Photo credit: Freddie Mac

“Mortgage rates continue to slowly drift downward with a distinct possibility that the average 30-year fixed-rate mortgage could dip below 3 percent later this year,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “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.”

This week’s 3.07 percent average 30-year fixed-rate mortgage is the lowest rate Freddie Mac has reported since it began recording average rates in 1971.

The 15-year fixed-rate mortgage averaged 2.56 percent, down slightly from last week’s 2.59 percent average and down from last year’s 3.18 percent average. The 5-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3 percent, down from last week’s 3.08 percent average and last year’s 3.45 percent average.

The historically low rates mean it’s a good time to buy a home, if you’re able, according to Odeta Kushi, the deputy first economist at First American.

“If you are financially stable, can qualify for financing and are able to find a home that meets your criteria (this is a tough one) — now is a good time to buy,” Kushi posted on Twitter.

Joel Kan | Mortgage Bankers Association

Despite the historically low rates, mortgage purchase volume was actually down for the week in both refinances and new purchases, on a week-over-week basis, according to the Mortgage Bankers Associations’ weekly mortgage application survey.

The refinance index was down 2 percent from the prior week and the seasonally-adjusted purchase index was down 1 percent from the week prior. The seasonally adjusted purchase index was actually 15 percent from the same week in 2019, however.

“Mortgage applications fell last week despite mortgage rates hitting another record low in MBA’s survey,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement. “Investors are contemplating the risks of the recent resurgence of COVID-19 cases to the labor market and economy, and Treasury rates and mortgage rates are moving lower as a result.”

“After two months of strong growth, purchase applications declined for the second week in a row,” Kan added. “The weakening in activity is potentially a signal that pent-up demand is starting to wane and that low housing supply is limiting prospective buyers’ options.”

Low mortgage rates are the key to affordability this summer, according to Mark Fleming, the chief economist at First American. But even the historically low rates might not be enough to overcome the high price appreciation the low inventory housing market is experiencing, along with the general economic uncertainty with high unemployment and diminishing wages.

“Our research has also found that in past recessions, house prices show their ‘downside stickiness,’ meaning they remain flat or their growth slows during economic downturns, but often do not decline much,” Fleming said, in a statement. “Because of this, in the near term, we anticipate nominal house price appreciation to accelerate this summer.”

“Additionally, the May Employment Situation Summary points to a decline in average hourly wages, likely resulting in falling average household income,” Fleming added. “If household income growth slows and house prices continue to rise, even today’s record-low mortgage rates may not keep affordability from declining.”

Email Patrick Kearns

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