Mortgage rates reached a new all-time low before the weekend of July 4

Could average mortgage rates fall below 3%? If the recent trend continues, it is a clear possibility.

The 30-year fixed-rate mortgage averaged 3.07% for the week ending July 2, six basis points less than the week before, Freddie Mac FMCC,
+ 1.59%
reported Thursday. In comparison, these loans had an average rate of 3.75% a year ago.

The 15-year fixed-rate mortgage fell three basis points to an average of 2.56%, while the five-year Treasury-indexed adjustable-rate hybrid mortgage fell eight basis points to 3%.

The previous record low for the benchmark 30-year mortgage was set just two weeks ago at 3.13%. Mortgage rates have fallen to record lows several times this year as the coronavirus pandemic has caused confusion in the markets and the economy.

This week, the decline in rates came “as investors reacted to rising COVID cases and the Federal Reserve’s worried prospects for the economic recovery,” said George Ratiu, economist at The drop came despite some positive indicators on the state of the economy, including rising pending home sales and consumer confidence.

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Do not missMortgage rates continue to drop to record lows, so now is a good time to refinance.

When the coronavirus outbreak began to worsen in the U.S., many mortgage and real estate experts ruled out the possibility that rates would fall below that threshold.

But now the 30-year loan rates are on the precipice of the 3% mark. “Mortgage rates continue to drop slowly with a clear possibility that the average 30-year fixed-rate mortgage will fall below 3 percent later this year,” said Sam Khater, chief economist at Freddie Mac, in the report of this week.

The trajectory of the rates will largely depend on the direction of the recovery from the pandemic. Many states across the country have seen an increase in COVID-19 cases recently.

“Getting approved for a loan is proving to be a difficult challenge for many, especially first-time homebuyers struggling to get a 20% down payment.”

– George Ratiu, senior economist at

And some of those states were driving the rebound in the housing market that began to take shape in May. A report released this week by housing data provider HouseCanary found that Florida and Texas led the country in terms of high housing demand in late June.

However, both states have seen thousands of new cases of COVID-19 daily in the past few weeks, suggesting that the rise in coronavirus infections could threaten the rebound in the housing market.

And record mortgage rates aren’t getting the same boost to consumer interest that they usually do. Last week, the number of mortgage applications used to buy homes decreased, according to data from the Association of Mortgage Bankers.

“Getting approved for a loan is proving to be a difficult challenge for many, especially first-time homebuyers struggling to get a 20% down payment,” said Ratiu.

Lenders have raised their underwriting standards in the face of the economic downturn, which could limit the stimulating effect that interest rates will have on the real estate market.