E Economics

US 15-Year Mortgage Rates Fell To A Record Low

01 January, 2021


US 15-year mortgage rates kept falling this week, hitting a new record low. According to Freddie Mac, 15-year fixed-rate mortgage averaged 2.17 percent for the week ending December 31, 2020, down from last week when it averaged 2.19 percent. A year ago at this time, the 15-year FRM averaged 3.16 percent.




After exceeding 8 percent in mid-2000, U.S. 15-year mortgage rates have steadily declined and have been consistently below 3 percent since April 2020. In the meantime, the report also highlighted that the 30-year fixed-rate mortgage averaged 2.67 percent for the week ending December 31, 2020 and was close to its record low of 2.66 percent reached last week. “All eyes have been on mortgage rates this year, especially the 30-year fixed-rate, which has dropped more than one percentage point over the last twelve months, driving housing market activity in 2020,” said Sam Khater, Freddie Mac’s Chief Economist.


The sharp drop in borrowing costs has supported the housing industry with prices rising at the fastest pace since June 2014 in October. In addition, on the supply side, the latest NAR report highlighted that available inventory declined 22% YoY to 1.28 million units in November (the lowest in data back to 1982). As a result, home price indexes are likely to rise even faster in both November and December despite Covid-19 resurgence.


Meanwhile, even though U.S. policymakers want to keep interest rates low until at least 2023 and didn’t specify when they want to slowdown Fed asset purchases (of both treasuries and MBS), a constant spike of housing prices (by more than 10% YoY) could push them to rethink Fed strategy sooner than expected.