Mortgage rates dip below 3% again
The average rate for a 30-year fixed-rate mortgage dipped back below 3 percent last week, according to the government-sponsored mortgage company Freddie Mac. The reversal comes just in time for the spring homebuying season.
The average rate for a 30-year fixed-rate mortgage fell to 2.97 percent from 3.18 percent three weeks ago. This is the second time since Freddie Mac began tracking rates in 1971 that rates have fallen below 3 percent; the other time was also during the pandemic. Two years ago, before the pandemic and its accompanying recession drove rates down, the average rate was 4.2 percent.
Jemila Winsey, real estate broker at the Winsey Group, said lower rates could add fuel to an an already frenzied market. This week, she’s closing on one home at $15,000 above what was asked for; next week she’s closing on another that is selling for $20,000 above listing price.
If rates allow buyers to offer even more at the same monthly payment, she thinks some may. “That’s the natural progression,” she said.
Mortgage rates fell to all-time lows during the pandemic and the accompanying recession because of economic uncertainty. When investors are concerned about the future of the economy, they seek safer investments and pour money into government bonds and mortgage debt, driving rates down.
In the past month, as stimulus bills pumped money into the economy, the Fed signaled its willingness to tolerate some inflation and investors moved back into the stock market, rates had adjusted to more normal levels.
Danielle Hale, chief economist at real estate listing company realtor.com, attributed the about-face to the Fed’s “patient approach to monetary policy.” Inflationary fears subsided somewhat. Investors, Hale said in an email, have “confidence that the Fed won’t push rates up too quickly.”
The low rates, coupled with an uptick in new listings during a traditionally hot time for home sales, could mean a strong season for home sales. “Buyers still have to grapple with fast-selling homes and rising prices,” Hale said. “But at least there may be more options to choose from soon.”