Mortgage interest rates are staying at record lows
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The past two weeks have seen mortgage interest increase, but the increase has been so small that rates are still close to the lowest they have ever been. They closed out last week at 2.90%, according to the Freddie Mac weekly report. This low number is a mere four basis points above the lowest rates on record of 2.86%—where they landed during the second week of September.
These record lows are encouraging buyers and refinancers alike to hurry up and get their paperwork submitted, as proved by the consistent increases in both purchase and refinance applications. Purchase applications increased by 3% on a seasonally adjusted basis (but 13% on an unadjusted basis) over the last week, which is 25% higher than a year ago, according to the Mortgage Bankers Association. Refinance applications saw an increase of 9% from the week before—an impressive 86% higher than the same time in 2019. Their share continues making up most of the activity, with refinances taking up 64.3% of the applications last week.
The slight nudge upward comes at a time when the number of homes on the market has plummeted. A recent study released by Realtor.com shows compared to 2019, 400,000 fewer homes have been listed for sale since mid-March, when the covid pandemic hit the U.S. Demand for homes was already high even before covid had its impact, but now that there are that many fewer homes for sale the pressure on buyers is even greater. In the short term, the lack of supply is going to be a stronger force than low interest rates. As Sam Khater, Freddie Mac’s Chief Economist, says, “While there is room for rates to decrease even more, higher home prices and low inventory could potentially stifle the high demand that we’ve been seeing.”