Mortgage rates continued a multi-month descent Thursday, hitting their lowest levels in six months. Lower rates mean fresh buying power for potential homebuyers and a good opportunity for homeowners to refinance their mortgages.
Freddie Mac's latest report shows the 30-year fixed-rate mortgage (FRM) averaged 2.77%. The rate topped in early April and nears the February low.
Sam Khater, the Chief Economist at Freddie Mac, explained that falling mortgage rates coincide "with global market uncertainty surrounding the Delta variant of COVID-19 -- the 10-year Treasury yields drift lower, and consequently mortgage rates followed suit."
"The 30-year fixed-rate mortgage dipped back to where it stood at the beginning of 2021, and the 15-year fixed remained at its historic low. This bodes well for those still looking to refinance, renovate or even purchase a new home," said Khater.
Lewis Sogge, a senior loan officer at Freedom Mortgage, said the latest decline in mortgage rates was not unexpected as the Federal Reserve continues its bond-buying program of $40 billion in mortgage-backed securities per month.
Sogge said his pipeline of refinancing has strengthened as the 30-year FRM dove under 3% in June.
Homebuyer sentiment has collapsed amid record-low mortgage rates making homes unaffordable for the majority...
...and perhaps this drop in demand (as seen in the plunge in mortgage apps) prompted a 'price' adjustment in mortgages also. Notably, the recent drop in rates has resulted in a demand pick up in mortgage applications this summer.
The unfortunate reality of low-interest rates is that the housing bubble will continue expanding and make housing less accessible for middle-class and working-class people.
What could possibly go wrong with home prices already blasting higher at record pace?
With multiple Fed members commenting about a future bond-buying taper program, the senior loan officer said his eyes are on the upcoming meeting of central bankers in Jackson Hole later this month for further insight on the rate pathway.