- Election week saw 30-year fixed mortgage rate fall to 2.78%
- 15-year fixed, jumbo and FHA loans/mortgages all set new record lows as well
By the end of November’s first week with its national elections, buyers AND sellers were smiling regardless of their political party affiliations and voting choices. Mortgage rates hit their 12th record low for 2020.
The average rate on the 30-year fixed mortgage hit 2.78%, down substantially from 3.69% during the same week in 2019, according to Freddie Mac. Additionally, new record lows in average rates for 15-year fixed mortgages, FHA loans and jumbo loans, according to the Mortgage Bankers Association (MBA), also made buyers and seller smile.
Because mortgage rates tend to take the lead from yields on the 10-year US Treasury, George Ratiu, senior economist with realtor.com, commented, “Interest rates dropped to another record low…in a volatile economic environment, where the number of Americans filing for initial unemployment (continues to be elevated)…and with low returns due to the Federal Reserve’s quantitative easing, bond investors sought the relative safety of mortgage-backed securities.”
Not only are homebuyers rushing to take advantage of these record low rates, homeowners are also rushing to refinance their existing mortgages. The MBA indicated that mortgage refinance applications were up over +80% during national election week compared to the same week in 2019.
The downsides to record low interest rates that give buyers more purchasing power included fueling already skyrocketing home prices and further depleting already record-low home supplies across the country. According to Andrew Abrams, chair of the Denver Metro Association of Realtors’ market trends committee, “Sellers continued to have little competition as escalation clauses, appraisal gap waivers and ‘as-is’ offers were frequently used, while buyers had to fight hard, (and make) concessions…to secure a place they could call home.”
And, by the way, inventory of for-sale homes in Denver hit a record low of less than a one-month supply.
Thanks to CNBC and the Mortgage Bankers Association.