Stop us if you’ve heard this before: Mortgage interest rates just dropped to historically low levels. That has become the trend recently as market moves, and actions by the Federal Reserve, continue to not only keep rates steady and low, but push them even lower.
Mortgage News Daily reported this week that the average for a 30-year fixed-rate mortgage dropped below 3%. Freddie Mac’s 30-year fixed-rate mortgage average is just above that at 3.21%, but their data was collected before markets took a nosedive on Thursday.
We do want to take a moment and remind you that interest rates vary for everyone. Rates are calculated depending on your credit score, the amount of debt you have, how much of a down payment you have and even how much you’re willing to pay in fees to reduce your interest rate (those are called points). Keep all of that in mind when you call your Movement Mortgage loan officer.
Ok, back to the market. Friday morning’s Dow futures market was trading up by 600 points, making up about a third of the loss suffered in a major selloff Thursday afternoon. The Dow Jones Industrial Average tanked on Thursday afternoon, dropping 1,800 points, spurred by reports of the increase in COVID-19 cases across the country. The Dow started its drop early Thursday, hitting a loss of 1,000 points by early afternoon before tanking in the final hour of trading. The S&P 500 saw a 5.7% slide while the Nasdaq took a 5% loss. The indices’ biggest one-day losses since March.
That was only part of the reason rates dropped. The other factor keeping rates low is the Federal Reserve. In its monthly meeting this week, the Fed voted to keep benchmark interest rates at zero. Remember, that 0% benchmark rate does not directly affect individuals, it just makes it cheaper for banks to borrow money. So you will more than likely see that reflected in the interest rate on your credit card, not your mortgage rate.
What does affect your rate is the second half of the Fed’s move. Members also decided to increase the central bank’s bond holdings by spending about $80 million a month on Treasury purchases and buying up agency mortgage-backed securities at $40 billion per month. That is the Fed’s way of supporting the housing industry, giving lenders a secure buyer.
- More than 1.5 million Americans filed for initial unemployment claims this week, according to the Bureau of Labor Statistics.
- The number of people claiming unemployment benefits for at least two weeks is still over 20 million.
- Mortgage purchase applications were 13% higher this week than a year ago, according to the latest data from the Mortgage Bankers Association. This is the eighth straight week of increases in purchase applications.
- Refinances are up 80% from the levels of a year ago.