Mortgage rates fall to record new low as home sales begin to sputter

The average rate for a 30-year, fixed-rate mortgage once again hit a new all-time low, clocking in at 2.71%, according to data released 12/3/2020 by Freddie Mac. But even with a new historic low for the 14th time this year, Freddie Mac Chief Economist Sam Khater believes home sales are hitting a wall.

“While homebuyer appetite remains robust, the scarce inventory has effectively put a limit on how much higher the number of sales can increase,” Khater said, in a statement. “Unfortunately, the record low supply combined with strong demand means home prices are rapidly escalating and eroding the benefits of the low mortgage rate environment.”
The average rate for a 30-year, fixed-rate mortgage fell to 2.71%, the lowest number ever recorded by Freddie Mac’s weekly survey of rates, which dates back to 1971. This time last year, the average rate for a 30-year, fixed-rate mortgage was 3.68%. The 15-year fixed-rate mortgage meanwhile average 2.28%, below the 3.14% average for the same week in 2019.

While low interest rates have been fuel for the blazing housing market in 2020, double-digit price gains over the past three months have chipped away at affordability gains for Americans, according to Ratiu. And while contract signings were still up more than 20% year over year, the month-to-month decline shows signs that sales are slowing down.