The average U.S. fixed rate for a 30-year mortgage fell to 3.5% this week, representing the first decline in three weeks, according to Freddie Mac.
The rate is 15 basis points below last week’s level of 3.65% and is more than half a percentage point lower than the 4.06% of the same week a year ago.
In addition to a drop in the 30-year fixed-rate, the 15-year fixed rate averaged 2.92%, down from 3.06% last week. However, the five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.34%, up from last week’s rate of 3.11%.
The Federal Reserve’s efforts to stabilize markets with a pledge of unlimited bond-buying, including mortgage-backed securities, likely caused this week’s rate decline, said Sam Khater, Freddie Mac’s chief economist.
“The Federal Reserve’s swift and significant efforts to stabilize the market were much needed and helped mortgage rates drop for the first time in three weeks,” Khater said. “Similar to other segments of the economy, real estate demand is softening. However, the combination of the Fed’s actions and pending economic stimulus will provide substantial support to the mortgage markets.”
On Wednesday, the Senate passed a $2 trillion federal rescue package that is designed to financially aid American households struggling to make ends meet during the COVID-19 pandemic.
Almost half of America’s population lives in states that have implemented stay-at-home orders in an effort to slow the spread of the disease.
The government’s package, which is now the largest-ever stimulus bill in U.S. history, includes $250 billion in direct checks to Americans and boosts unemployment benefits to help people pay their bills, including rent or mortgages.
There’s also $350 billion in loans for smaller businesses, aimed at keeping workers on the payrolls. The disbursement of those funds will be overseen by the Small Business Administration.