US mortgage rates have fallen back to sub-3%, slipping to their lowest levels in two months, Freddie Mac reported today.
The 30-year fixed-rate mortgage dropped seven basis points to 2.97%, according to Freddie's Primary Mortgage Market Survey. The rate on the 15-year loan has also decreased from 2.35% to 2.29% this week, while the 5-year Treasury-indexed hybrid adjustable-rate mortgage inched up three basis points to 2.83%.
"The drop in mortgage rates is good news for homeowners who are still looking to take advantage of the very low-rate environment," Freddie Mac Chief Economist Sam Khater said. "Freddie Mac research suggests that lower-income and minority homeowners have been less likely to engage in the refinance market. Low and declining mortgage rates provide these homeowners with the opportunity to reduce their monthly payment and improve their financial position."
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Consequently, borrower demand increased after six straight weeks of declines. Mortgage applications climbed 8.6% this week, according to the Mortgage Bankers Association.
Joel Kan, AVP of economic and industry forecasting at MBA, said that the drop in mortgage rates prompted a resurgence in refinance activity.
"Borrowers acted on the decrease in rates for most loan types, with both conventional and government refinance applications showing gains," he said. "The spring housing market also saw a boost from lower rates, with purchase applications – driven by a jump in conventional applications – increasing over 5%. MBA expects the purchase market to remain strong, with the recovering job market and supportive demographics fueling housing demand in the months ahead."