Mortgage rates fell to a new record low for the 15th time this year, firing buyers desperate for low rates.
The 30-year fixed-rate mortgage averaged 2.67% for the week ending December 17, four basis points lower than the week before, Freddie Mac FMCC,
reported Thursday. The benchmark loan fell to its previous low of 2.71% earlier this month and has remained there until now.
A year ago, the interest on the 30-year loan was a full percentage point higher. During the same period in 2019, these loans had an average interest rate of 3.73%.
The 15-year fixed-rate mortgage fell five basis points to an average of 2.21%, while the five-year floating-rate hybrid mortgage remained stable at 2.79%.
The fall in interest rates “comes as the Fed kept interest rates close to zero and Congress showed signs of progress on a new stimulus bill, while jobless claims rose,” said Danielle Hale, chief economist at Realtor.com.
This week, the Federal Reserve announced it would not move interest rates from where they are today. The Federal Reserve monitors short-term interest rates, which have no direct impact on the mortgage market. However, mortgage rates are driven by shifts in long-term bond yields, such as the 10-year treasury TMUBMUSD10Y,
– Bond investors are often guided by the actions of the Fed and influence long-term interest rates.
At the same time, there could be more pronounced shifts in the mortgage market if lawmakers are satisfied with a new stimulus package. “The dynamics of mortgage rates in recent months have relied less on economic data and more on policy-related issues – both fiscal and monetary – as well as epidemiological developments,” said Matthew Speakman, an economist at Zillow ZG.
Investors have expected lawmakers to come to an agreement on new stimulus funds, so some of those expectations have already been factored into interest rates in recent weeks, Speakman said. But if Congress surprises with a larger-than-expected package, it could “put some upward pressure on mortgage rates,” he added.