The average U.S. rate for a 30-year fixed mortgage ticked up to 3.26% this week, the second-lowest ever recorded by Freddie Mac and three basis points away from the all-time low set last week.
“Mortgage rates stayed at or near record lows for the fifth straight week and homeowners are taking advantage with refinance activity remaining high,” said Sam Khater, Freddie Mac’s chief economist.
Khater predicts refinancing will reach a seven-year high of $1.26 trillion this year as homeowners who still have jobs scramble to lock in the low rates and reduce their monthly payments.
That would put 2020 refi volume about 15% higher than the $1.1 trillion of refis in 2019 and more than double the $537 billion of volume in 2018.
Mortgage rates have inched a few basis points higher this week as mortgage investors weigh the danger of skyrocketing unemployment.
Most economists expect Friday’s unemployment report to show the rate more than tripled in April to about 16%, an all-time high, according to the average estimate in a poll by Trading Economics.
Lenders have tightened standards because of the instability in the economy caused by the COVID-19 pandemic. An index measuring the availability of credit tumbled 12% in April to its lowest level in five years, the Mortgage Bankers Association said in a Thursday report.
“The abrupt weakening of the economy and job market – and the uncertainty in the outlook – drove credit availability down in April for the second consecutive month,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.
Freddie Mac’s report also reported changes in the average rate for two other types of home loans on Thursday. The average 15-year fixed rate averaged 2.73%, down from 2.77% last week.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.17%, up from last week’s rate of 3.14%.