Mortgage rates plunge to yet another all-time low

Mortgage rates fell this week to the lowest level ever recorded by Freddie Mac, even as it appears the relationship to the benchmark 10-year Treasury yield has stabilized.

"The 30-year fixed-rate mortgage has again hit the lowest level in our survey's nearly 50-year history, breaking the record for the third time in just the last few months," Sam Khater, Freddie Mac's Chief Economist, said in a press release.

"These unprecedented rates have certainly made an impact as purchase demand rebounded from a 35% year-over-year decline in mid-April to an 8% increase as of last week — a remarkable turnaround given the sharp contraction in economic activity. Additionally, refinance activity remains elevated and low mortgage rates have been accompanied by a $70,000 decline in the average loan size of refinance borrowers this year. This means a broader base of borrowers are taking advantage of the record low rate environment, which will benefit the economy."

According to Zillow's tracker, which is based on offers to consumers made by lenders on the site, rates for the 30-year fixed mortgage rose from the prior week. But on that site, rates remained near all-time lows as markets began to behave in a more normal manner again.

"After a period of immense market uncertainty that at times led to unpredictable rate movements, the relationship between bond yields and mortgage rates appears to be rekindled. Financial volatility has notably decreased in recent weeks, resulting in steady improvements in the stock market, and more predictable — albeit modest — movements in bond markets," said Zillow economist Matthew Speakman when that company released its own rate tracker Wednesday evening.

"The eased strains in financial markets have also resulted in mortgage rates remaining fairly flat in the last couple of weeks and are generally calmer following the turmoil experienced in the early days of the coronavirus outbreak. As stock markets have performed strongly in recent weeks, the fact that rates have fallen and remained steady suggests that rates are poised to remain low, boding well for potential homebuyers."

The 30-year fixed-rate mortgage averaged 3.15% for the week ending May 28, down from last week when it averaged 3.24%, the Freddie Mac survey reported. A year ago at this time, the 30-year fixed-rate mortgage averaged 3.99 percent.

The 15-year fixed-rate mortgage averaged 2.62%, down from last week when it averaged 2.7%. A year ago at this time, the 15-year fixed-rate mortgage averaged 3.46%.

The five-year Treasury-indexed hybrid adjustable-rate mortgage averaged 3.13%, down from last week when it averaged 3.17%. A year ago at this time, the five-year adjustable-rate mortgage averaged 3.6%.