The average rate on the popular 30-year fixed-rate mortgage for the 13th time this year fell to a record low amid mixed data showing weak consumer spending in the overall economy but a boom in the housing market.

According to a Freddie Mac survey released Thursday, the average on the 30-year fixed-rate mortgage dropped to 2.72% from 2.84% with an average 0.7 point. (A point is a fee, typically amounting to 1% of the loan, that buyers pay to receive a better rate.) The 2.72% average rate is far below the 3.66% level a year ago.

The 15-year fixed-rate average reached 2.28%, with an average 0.6 point — down from 2.34%. The five-year adjustable-rate average of 2.85%, with an average 0.3 point, was down from the 3.11% of the previous week. A year ago, the 15-year rate was 3.15%, and the five-year was 3.39%.

“Mortgage rates hit another record low because investors are facing increased uncertainty about rising covid-19 cases and the weak economy,” said George Ratiu, senior economist for Realtor.com. “Just this morning new unemployment claims rose, which means that 742,000 people lost their jobs last week. And the previous week’s claims were revised up to more than 700,000.”

Ratiu said that a normal rate of job churn would generate about 250,000 new unemployment claims per week.

“The good news about a potential vaccine is still overshadowed by the weak economy so investors are choosing mortgage-backed securities [bundled mortgages sold to investors] for safety and that keeps rates low,” Ratiu said. “Even though the stock market has reached new highs recently, that’s mostly a function of some investors willing to speculate and take more risks because returns on other investments like money market accounts and even the 10-Treasury are so low.”

Another indication of the weak economy, Ratiu said, is weaker-than-expected retail sales. Retail sales were predicted by economists to increase 0.5% in October compared with September. But the Commerce Department reported that retail spending rose in October by just 0.3%. In addition, September’s increase in spending was revised down from 1.9% to 1.6%.

In October, retail spending was just 0.1% when you remove “core retail sales” on cars, gasoline, building materials and food services, further indicating a pullback among consumers on nonessential retail purchases.

“The month-over-month growth we saw was mostly for used cars and gasoline,” Ratiu said. “If you take out those things, the data speaks to the fact that consumers are really feeling the impact of expired unemployment benefits.”

The average rate on the 30-year fixed-rate mortgage has steadily declined from a high of 3.65% in March to 2.72%, the lowest level since the quasi-government agency began collecting data in 1971. The reductions were spurred mostly by Federal Reserve action in buying mortgage-backed securities to stabilize the housing market during the economic downturn.

The low rates are spurring demand in the housing market. In October, housing starts rose 14.2% compared to October 2019 to an annual rate of 1.53 million homes and 4.9% higher than housing starts in September. Housing starts for single-family homes have increased for six consecutive months and are now at the highest level since 2007, according to the Census Bureau.

Also existing-home sales were up 26.6% in October compared with the number of sales in October 2019, according to the National Association of Realtors (NAR). The median sales price jumped to $313,000, almost 16% more than the median sales price in October 2019.

Still, the high demand is also reducing opportunities for many consumers to take advantage of the low rates by depleting inventory and driving up prices. The number of homes for sale declined to 1.42 million, which is enough to last 2.5 months at the current pace of sales, a record low, according to NAR. In addition, 72% of homes sold in October 2020 were on the market for less than one month, an indication of the steep competition buyers face.

“There are a few factors that are causing a mixed-bag in recent mortgage rates,” Mark Garland, managing director at SitusAMC, a technology company for the real estate finance industry in Denver, said in an email.

“The continued support by the Federal Reserve is keeping the capital markets ‘well oiled’ with the purchase of mortgage bonds and that helps to keep mortgage rates low,” Garland added. “There’s also a supply and demand factor in mortgage rates because the industry is having a hard time keeping up with all of the consumers looking to either refinance or purchase homes. While additional fees set by the FHFA [Federal Housing Finance Agency] and folded into the rates for consumers looking to refinance have an impact on mortgage rates, lenders are also hoping to start 2021 out strong as to lending volume, so they would be lowering their rates to attract business.”

Freddie Mac determines the averages based on results from its Primary Mortgage Market Survey — a weekly questionnaire 80 lenders nationwide use to record the rates they’re offering borrowers seeking conventional mortgages who have excellent credit and are making a 20% down payment.

“Weaker consumer spending data, which accounts for the majority of economic growth, drove mortgage rates to a new record low,” Sam Khater, Freddie Mac’s chief economist, said in a statement. “While economic growth remains unstable, strong housing demand continues to have a domino effect on many other segments of the economy.”

Meanwhile, the overall number of mortgage applications declined slightly, driven down by a tight market resulting from high demand from low interest rates.

The market composite index, which measures the volume of both application types, fell 0.3% from last week, according to the Mortgage Bankers Association. The purchase index dropped 1% from last week but rose 26% from a year ago. The refinance index fell 2% from a week earlier and surged 98% from a year earlier.

“Homebuyer demand is still strong overall, and activity was up 16.5% from a year ago. However, inadequate housing supply is putting upward pressure on home prices and is impacting affordability — especially for first-time buyers and lower-income buyers,” Joel Kan, the association’s associate vice president of economic and industry forecasting, said in a statement. “The trend in larger average loan application sizes and growth in loan amounts points to the continued rise in home prices, as well as the strength in the upper end of the market.”

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