30-Year Mortgage Rate Nears Record Low on Downturn Fear

Number of the Day: The most relevant or interesting figure in personal finance

NOTD 0.13 percentage point

The Balance

That's how close the average 30-year mortgage rate got to its record low this week, according to Freddie Mac, showing how sharply rates have fallen recently amid concerns about how rising virus cases may affect the economy.

While there are signs rates may already be on their way back up, the average 30-year fixed-rate mortgage fell to 2.78% from 2.88% in the latest survey by Freddie Mac, released Thursday. That’s not far off from the all-time low of 2.65%, reached in January.

Fixed mortgage rates are closely linked to 10-year Treasury yields, and concerns about how new variants of COVID-19 may affect economic growth have caused Treasury yields to drop in recent weeks. (Likewise, Treasury yields have recovered part of their decline from earlier this week, and some data is already showing rates moving higher.) 

Mortgage rates had risen earlier in the year, one of several headwinds for prospective home buyers dealing with a shortage of homes for sale, higher and higher sale prices and fiercely competitive bidding wars. But since April, the environment has changed notably, not only with rates on a downward slope but with the number of homes on the market starting to recover.

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