Mortgage rates dropped again this week, with the 15-year fixed-rate loan hitting a record low, according to a report from mortgage financier Freddie Mac.
The 15-year fixed rate fell to 2.56% from 2.61%. A year ago, it stood at 3.07.
The most popular mortgage, the 30-year fixed rate, came in at 3.35%, a drop of 0.05 percentage point and only 0.04 percentage point above its record low set the week of November 21, 2012.
The rates provide a welcome boost to the housing market and to the overall economy, according to Frank Nothaft, Freddie Mac’s chief economist.
“Residential fixed investment added to overall economic growth over the past eight consecutive quarters and contributed more than 0.3 percentage points in growth over the first three months of this year,” he said. “[N]ear record low mortgage rates should further drive the housing market recovery over the near term.”
The news came a day after the Fed announced that it would keep buying up to $85 billion in mortgage-backed securities and Treasuries a month.
“There was a chance that the Fed would start to taper their purchases as summer approached,” said Keith Gumbinger, of HSH.com, a loan information provider. “But that is starting to look less likely, given the still-soft state of the economy. Odds favor that the programs will continue until much later in the year, so mortgage rates should continue to be available at fantastic rates.”
Low rates help existing homeowners even if they don’t refinance their homes. Affordable loans boost homebuyer demand, sending home prices higher. They’ve recorded a 9% gain over the past 12 months, according to the S&P/Case-Shiller home price index.
Read the full report here.