Mortgage rates hit another all-time low, but will consumers benefit?

Just a week after commenting that the bottom on mortgage rates was possibly reached, Freddie Mac reported that they fell 6 basis points to another record low.

Mortgage rates had been flat over the past several weeks. This week's drop is the largest movement in either direction since the week of Sept. 10.

"Low mortgage rates have become a regular occurrence in the current environment," Sam Khater, Freddie Mac's chief economist, said in a press release. "As we hit yet another record low, the tenth record this year, many people are benefiting as refinance activity remains strong. However, it's important to remember that not all people are able to take advantage of low rates given the effects of the pandemic."

The 30-year fixed-rate mortgage averaged 2.81% for the week ending Oct. 15, down from last week when it averaged 2.87%. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.69%.

Meanwhile, the 15-year FRM averaged 2.35%, down from last week when it averaged 2.37%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.15%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 2.9% with an average 0.2 point, while a week ago it averaged 2.89%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.35%.

Rates remained flat this past week in Zillow's rate tracker, which is based on quotes provided through its site. "The very limited movements in rates have come as the bond market — something that normally drives mortgage rate dynamics — has experienced some increased volatility, as uncertainty of a new fiscal stimulus prompted Treasury yields to fluctuate over the last couple weeks," Matthew Speakman, an economist with Zillow, said in a comment following its weekly release on Wednesday. "The main thing keeping mortgage rates from moving in tandem is the spread between bond yields and mortgage rates, which remains very wide relative to recent years."

Optimal Blue, which also has a rate tracker, pegged the spread between the 30-year FRM and 10-year Treasury at 214 basis points. Normally it is around 180 bps.

"Demand for mortgages is still very strong and many lenders appear to be keeping rates higher in order to moderate the inflow of borrower requests and account for perceived risk," Speakman said. "While this limits the potential for mortgage rates to move notably lower, it also limits the risk of a sharp uptick in mortgage rates should Treasury yields head higher quickly."