Mortgage rates hit their lowest point since Freddie Mac began tracking this data in 1971, as the 10-year Treasury yield fell below 1% after the Federal Open Market Committee's surprise short-term rate cut.
"The average 30-year fixed-rate mortgage hit a record 3.29% this week, the lowest level in its nearly 50-year history. Meanwhile, mortgage applications increased 10% last week from one year ago and show no signs of slowing down," Sam Khater, Freddie Mac's chief economist, said in a press release.
"Given these strong indicators in rates and sales, as well as recent increases in new construction, it's clear the housing market continues to be a positive force for the broader economy."
The 10-year Treasury note dipped below 1% following the Fed announcement on March 3, before rising at the end of the trading day. It again fell below 1% on March 4, once again moving back above that mark by closing. In early trading on March 5, the yield was again below 1%.
"Mortgage rates fell to new lows this week, as fears of further, unchecked spread of the coronavirus kept investors, and the Federal Reserve, in search of safety and stimulus," Zillow Economist Matthew Speakman said in his commentary on that company's rate tracker. "A week full of otherwise blockbuster political and economic news was still not enough to knock the coronavirus from its perch at center stage, where it dictated market movements to a historic degree."
"And while the response of mortgage rates was again relatively muted given the dramatic fall in yields, mortgage rates did ultimately decline notably, touching their lowest level in more than seven years over the past few days," Speakman continued.
The 30-year fixed-rate mortgage averaged 3.29% for the week ending March 5, down from last week when it averaged 3.45%, the Freddie Mac survey reported. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.41%.
The 15-year fixed-rate mortgage averaged 2.79%, down from last week when it averaged 2.95%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.83%.
The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.18% with an average 0.2 point, down from last week when it averaged 3.2%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.87%.
Whether mortgage rates can drop further remains an open question at this point, especially with the Bureau of Labor Statistics report due out on March 6 and other economic data to follow, Speakman said.
"Much remains unknown with this virus and its potential impact on human life and economic activity. Friday's February jobs report should offer some insight into how employers were bracing for impact last month as initial reports of the virus' spread began to surface, and coming reports in the next few weeks will offer evidence of how consumers are digesting the news. Regardless, COVID-19 is here, and it will continue to be the main driver of mortgage rate movements in the coming weeks," Speakman said.
