The average interest rate on a 30-year fixed-rate mortgage fell to an all-time high of 2.88% last week, according to Freddie Mac. This is the lowest level in nearly 50 years of the mortgage giant’s investigation. The 15-year fixed rate mortgage fell to 2.44%.
“We expect rates to stay low and continue to propel the buying market forward,” said Sam Khater, chief economist at Freddie Mac. “However, the main obstacle to increasing demand remains the lack of inventory, especially for entry-level homes.”
The number of homes for sale has fallen to some of the lowest levels on record, said George Ratiu, senior economist at Realtor.com. This has led to a frenzied environment of multiple offers, price escalation clauses and inspection exemptions.
“Historically low mortgage rates are fueling demand for real estate as buyers rush to lock in low monthly payments,” he said. “Sellers remain wary of listing and are often buyers of their next home themselves, so they continue to struggle with the same limited supply.”
Potential home buyers also face stricter lending standards, Ratiu said.
“At this rate, tighter lending standards and low inventories will squeeze real estate activity and we will see a substantial slowdown in sales in the second half of this year,” he said.
The MBA expects rates to stay at these low levels, spurring strong refinancing activity and providing homeowners with some relief in these uncertain economic times with lower monthly mortgage payments, said Joel Kan, associate vice president. economic and industrial forecasts of the MBA.
But he noted that loan balances are increasing.
“Purchase loan balances have continued to rise, possibly a sign that the still weak job market and tighter credit for government loans are straining some first-time homebuyers. “