Mortgage rates sink to another new low
Mortgage rates hit a new low again this week - they set a record for the tenth time this year - and experts said they could go further.
According to Freddie Mac, a government sponsored agency that supports millions of mortgages, the average 30-year fixed mortgage rate fell from 2.87% the previous week to 2.81% this week. The previous low was on September 10th when rates hit 2.86%.
Read More: The New Rules For Buying And Selling A Home In A Pandemic
The decline allows homeowners to commit to a lower rate in order to receive a lower monthly payment and encourages more buyers to enter an already competitive real estate market.
"Lower interest rates will further stimulate refinancing," said Dr. Frank Nothaft, chief economist at CoreLogic, a data and analysis company. "And by lowering monthly mortgage payments, first-time buyers have the opportunity to own their own home."
Around 19 million US homeowners could lower their mortgage rates by at least three-quarters of a point by refinancing, according to data provided to Yahoo Money by Black Knight, a mortgage analysis company. (Source: Getty Creative)
Around 19 million U.S. homeowners could lower their mortgage rates by at least three-quarters of a point by refinancing, according to data provided to Yahoo Money by Black Knight, a mortgage analysis company. These refinance candidates could save an average of $ 304 per month.
The record low rate may also encourage new buyers to enter the market, but faces other headwinds in home ownership.
Read more: Mortgage Rates Hit All Time Low: Is It Time For A Refinance?
"At these low levels, mortgage rates are still creating significant and unusually high demand for residential property, while supply from existing sellers and new builds has been difficult to match," said Danielle Hale, chief economist at Realtor.com. "But we also need a sustained economic recovery, otherwise buyers will run out of steam."
George Raitu, senior economist at Realtor.com, said interest rates could fall to 2.5% to 2.6% due to the development of government bonds that track mortgage rates. However, the benefits of low interest rates are gradually waning due to the "double win" of stricter lending standards and rising house prices, he said.
"Many lenders, aware of the economic outlook and borrowers' ability to repay loans, have asked for higher credit scores and down payments, effectively removing younger buyers," he said. "Meanwhile, overwhelmed by strong demand, they have also increased refinance rates, which is dampening benefits for many homeowners."
Dhara is a reporter for Yahoo Money and Cashay. Follow her on Twitter at @Dsinghx.
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