Pandemic pushes mortgage rates to newlow

Mortgage rates have fallen to a record low. Interest on the average 30-year fixed-rate mortgage last week was 2.81 percent, down from nearly 5 percent at the end of 2018, according to the government-sponsored mortgage finance company Freddie

Mac. The average rate for a 15year fixed-rate mortgage has fallen to 2.35 percent.

The record-low rates are a boon for homeowners, who can refinance mortgages to lower their monthly payments, and for homebuyers, who can buy a home that’s worth more for the same monthly cost.

Still, low rates are a sign of a troubled economy. When investors become nervous, they seek safer investments and pour money into government bonds and mortgage debt — much of it backed by Freddie Mac and its sister company Fannie Mae.

Investors are so hungry for security that they are willing to accept lower yields, driving down the interest paid on bonds and mortgages. Actions by the Federal Reserve to support the economy, including cutting short-term rates to near zero and buying government- and mortgage-backed bonds, are also driving down mortgage rates.

“Growing concern about continued coronavirus spread and the slowing pace of economic

recovery are likely to motivate investors to stay in safe assets and keep rates low,” Danielle Hale, chief economist of the homelisting site realtor.com, said in an email.

But the recession has caused a division between those who can benefit from low mortgage rates and those who cannot. Low mortgage rates and the increased amount of time spent at home have spurred many who have stayed in good financial shape during the crisis to purchase a home — home sales in the Houston area have been significantly higher for the past four months than they were during the same period a year before.

At the same time, however, others have lost jobs or seen their incomes slashed.

“(It’s) important to remember that not all people are able to take advantage of low rates, given the effects of the pandemic,” Freddie Mac said.