The average U.S. rate for a 30-year fixed mortgage fell to 3.31% this week, putting it three basis points away from setting a new all-time low.
It was down from 3.33% in the prior two weeks, Freddie Mac said on Thursday. The weekly average is falling after spiking to 3.65% in mid-March, when the COVID-19 pandemic began hitting the U.S. in force.
In the last week of March, the Federal Reserve said it would buy “unlimited” amounts of mortgage-backed securities to keep credit flowing.
“The government is raining money into capital markets to try to keep interest rates low to minimize the impact of COVID-19 and help the recovery once the economy begins reopening,” said Mark Goldman, a loan officer with C2 Financial in San Diego. “My guess is we’ll see rates continue to float down by a small amount in coming weeks.”
The Fed has purchased about $1.6 trillion of mortgage-backed securities and Treasuries in the last four weeks, according to Lorie Logan, an executive vice president at the Federal Reserve Bank of New York, which carries out market operations for the central bank.
“The scale of these purchases has been unparalleled,” surpassing even the Fed’s intervention following the collapse of the banking system in 2008, Logan said in a speech on Tuesday.
For the year, the average rate for a 30-year fixed mortgage probably will be 3.3 percent in 2020 and 3.1 percent in 2021 as the economy struggles to get on firm footing, Freddie Mac said in a forecast on Monday.
In addition to a drop in the 30-year fixed, Freddie Mac on Thursday reported changes in two other types of home loans. The average 15-year fixed rate averaged 2.8%, up from 2.77% last week.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.34%, down from last week’s rate of 3.4%.