Mortgage rates fall closer to the 3% mark

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Mortgage rates continued their slide, with the conforming 30-year fixed at its closest point ever to breaching the 3% mark, according to Freddie Mac.

The 30-year fixed-rate mortgage averaged 3.03% for the week ending July 9, down from 3.07%. It is yet another record low point since Freddie Mac began its Primary Mortgage Market Survey in 1971. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.75%.

"The summer is heating up as record low mortgage rates continue to spur homebuyer demand," Sam Khater, Freddie Mac's chief economist, said in a press release. "However, it remains to be seen whether the demand will continue if COVID cases rise to the point that it hinders economic growth."

Zillow's own rate tracker, updated daily, also has been trending down over the past weeks.

"But the daily movements have been very modest, despite a slew of economic data series that have seen record one-month improvements," Matthew Speakman, a Zillow economist, said in a commentary released Wednesday night. "The reality is that these monthly gains were largely expected — and likely already 'priced-in' — and, despite the improvements, the economic recovery still has a long way to go."

The 15-year fixed-rate mortgage averaged 2.51%, down from last week when it averaged 2.56%, Freddie Mac said. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.22%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.02% with an average 0.3 point, up slightly from last week when it averaged 3%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.46%.

What will affect rate movements going forward is concerns over the viability of an economic recovery given the spike in coronavirus cases, Speakman said.

"As a result, investors appear to be hanging tight, waiting for surprising data and/or evidence of our society's ability to function — or not function — amid rising COVID-19 case volumes before acting in a way that would force mortgage rates to respond. Absent this information, it's difficult to call where rates are likely to go from here," Speakman said.

"Positive news could easily jolt rates back upward, making these record-low levels a fond memory, but the gradual reduction of rates could also continue if new developments disappoint. Whichever way they go, mortgage rate movements will be driven by the spread of the virus and our ability to live with it."

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