Even as borrowers face challenges from strict credit standards and high unemployment, mortgage rates dropping over the past year to reach record or near-record lows are expected to continue to support the housing market, according to Marketwatch.
The 15-year fixed-rate mortgage hit a record low of 2.61% in the week ending April 25, down from 3.12% during the same period in the prior year, according to the latest data from federally controlled mortgage buyer Freddie Mac FMCC -0.85% .
The 5-year Treasury-indexed hybrid adjustable-rate mortgage also set a record low in the latest week, declining to 2.58%, compared with 2.85% in the prior year. The 15-year mortgage data go back to 1991, and the 5-year ARM data go back to 2005.
Meanwhile, the popular 30-year fixed-rate mortgage ticked down to 3.40% in the latest week – down more than one-tenth from the same period in the prior year – nudging closer to a record low of 3.31%.
What do low rates mean for housing?
“The housing market is getting a boost with mortgage rates hovering at or near record lows,” said Frank Nothaft, Freddie Mac’s chief economist.
Indeed, sales of existing and new homes have seen large gains over the past year, as levels rebounded from post-bubble lows.
Falling interest rates are also good for struggling borrowers who can refinance mortgages to cut monthly payments. A report this week indicated that struggling homeowners who have received help from a federal refinancing program took a record high share of refinancing applications in the most recent weekly data.