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Average mortgage rate dives below 2.7% for the first time in U.S. (It’s the 15th time this year that rates have shrunk to historic lows)

After lingering for a few weeks, mortgage rates have dropped to a jaw-dropping new low that’s down more than a full percentage point from a year ago, according to a long-running survey.

The breathtakingly low rates are pushing prospective homebuyers off the sidelines and into the housing market, while homeowners are seizing the opportunity to refinance to lower interest rates and slash their monthly mortgage payments.

The new low on 30-year fixed-rate loans come as the U.S. faces off-the-charts coronavirus cases and hospitalizations; experts say the housing market is helping to support an otherwise stagnant economy.

But ultra-low rates might not last forever. A potential blockbuster spending package from Congress, and the eventual rollout of an effective COVID vaccine, could boost rates before the year is even up.

Rates sink yet again

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Mortgage rates have tumbled to an average 2.67% for a 30-year fixed-rate home loan, down from last week’s 2.72%, mortgage giant Freddie Mac said on Thursday. It’s the 15th time this year that rates have shrunk to historic lows, says the company, which began keeping records all the way back in 1971.

At this time last year, 30-year mortgages stood at an average 3.73%, more than a full percentage point higher than where they are today.

The new Freddie Mac survey follows a meeting of Federal Reserve policymakers that provided good news for borrowers. The central bank kept its benchmark interest rate near zero, and said it would keep buying up Treasury bonds and mortgage-backed securities. Those purchases are contributing to cheap mortgage rates.

Rates on other popular home loans also have fallen this week, the Freddie Mac survey shows.

The average for a 15-year fixed-rate mortgage decreased to a record-low 2.21%, down from 2.26% last week. That’s nearly a full percentage point lower than at this time last year, when the average was 3.19%.

For 5/1 adjustable-rate mortgages, or ARMs, the current average is unchanged from last week, at 2.79%, far below last year’s average of 3.36%.

Can rates go any lower?

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Borrowers are getting used to seeing interest rates go lower and lower. So, is the shrewd move to keep waiting it out?

Unfortunately, that might end up costing you.

“Sharper movements may be on the way as lawmakers reportedly move closer to a stimulus deal,” says Matthew Speakman, an economist with Zillow.

He points out that mortgage rates have been less dependent on the economic data coming in, and more on developments in Washington and coronavirus news.

“A new spending package may place some upward pressure on mortgage rates, particularly if the package contains more than has been reportedly debated,” Speakman adds.

Requests for refinance loans are at more than double the rate of a year ago, according to the Mortgage Bankers Association. But many homeowners are procrastinating and could miss out on big savings if rates rise.

More than 19 million mortgage holders who haven’t yet gotten in on the action could save an average $308 per month by refinancing now, says the mortgage technology and data provider Black Knight.

Good refi candidates — those with a solid credit score and at least 20% home equity — may want to hurry to lock one of the best rates while they last.

Cheap loans still helping buyers

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Low rates are helping to fuel a surging housing market, and the soaring demand for houses is keeping home sales at their strongest pace in more than 15 years, according to research from

“With rates still a whole percentage point below year-ago levels, buyers have not had to worry about affordability from a monthly payment perspective,” says chief economist Danielle Hale. “But unless rates fall further, affordability is likely to become a chief challenge in 2021.”

New construction stands out as a clear solution to rising prices, adds George Ratiu, senior economist at But, the resurgence of COVID-19 has slowed new builds and completions, he says.

For now, scoring a super-low mortgage rate is the best way to combat rising home prices. Experts say buyers should compare at least five mortgage offers to find the best deal, because rates can vary from one lender to the next.

You can save even more cash by shopping around when you buy or renew your homeowners insurance. Get a few quotes and compare them, to nail down the lowest price for the coverage you need.


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