US 15-year mortgage rates are close to record low after falling again this week. According to Freddie Mac, 15-year fixed-rate mortgage averaged 2.19 percent for the week ending February 11, 2021, down from last week when it averaged 2.21 percent. A year ago at this time, the 15-year FRM averaged 2.97 percent.
Over the same period, the report also showed 30-year fixed-rate mortgage averaged 2.73 percent and remained unchanged for the third consecutive week. A year ago at this time, it averaged 3.47 percent.
US mortgage rates have steadily declined since mid-2018 and reached record low level in late 2020. Sam Khater, Freddie Mac’s Chief Economist highlighted “New COVID-19 cases are receding, which is encouraging and that has led to a rise in Treasury rates. But, the run-up in Treasury rates has not impacted mortgage rates yet, which have held firm.”
Record low mortgage rates are supporting mortgage refinancing. On Wednesday, Mortgage Bankers Association (MBA) data showed that mortgage refinancing activity retraced a bit last week (-4.2 percent) but remained robust compared to a year ago (+45.6 percent).
The drop in borrowing costs and the boom in refinancing activity have boosted the housing industry with prices rising at the fastest pace on record. According to NAR’s latest quarterly report, the national median existing single-family home price rose 14.9% percent on a year-over-year basis. That was the biggest surge in data going back to 1990.
The trend is unlikely to change in the short term as the US economy showed signs of resilience (positive for demand) and supply remains very limited. Redfin chief economist Daryl Fairweather said this week “The number of homes for sale is at an all-time low and the supply shortage only seems to be getting worse”.