U.S. 30-year fixed-rate mortgages fell below 3% for the first time in records going back nearly 50 years last week, according to data released by Freddie Mac
U.S. mortgage refinancings are surging as historically low 30-year fixed mortgage rates attract borrowers, Bespoke Investment Group said on Wednesday.
Mortgage rates fell below 3% last week and have continued lower, with the potential fall as low as 2%, Bespoke said in a note to clients.
The implication is that the cost of home ownership is plunging and likely to fall further over coming months, fuelling substantial activity in the housing market as the economy rebounds, the note said.
U.S. 30-year fixed-rate mortgages fell below 3% for the first time in records going back nearly 50 years last week, according to data released by Freddie Mac on Thursday.
The sharp decline in mortgage rates comes as investors rush into safe-haven assets, such as U.S. Treasuries, which have been trading near all-time lows, while the Federal Reserve has signalled it will keep rates low in response to the coronavirus pandemic by purchasing Treasuries and other bonds.
Mortgage rates are likely to fall to 2.75% before they bottom, said Douglas Duncan, chief economist at Fannie Mae in an interview.
If you’re a salaried person that’s pretty confident of your job, it’s a pretty good time to buy a house, he said.
If you are a pristine credit I’m sure you will be able to get a rate below 2.75%, he added.
The experience for mortgage bond holders has been “brutal,” as large amounts of principle on higher-yielding mortgages are being paid back ahead of schedule due to refinancing, causing the duration of cash flows in mortgage bonds with higher coupons to decline rapidly, Bespoke said.
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