US mortgage rates hit another record low
[NEW YORK] Mortgage rates in the US started 2021 by setting another record low.
The average for a 30-year, fixed loan fell to 2.65 per cent, down from 2.67 per cent last week and the lowest in data going back 50 years, Freddie Mac said in a statement Thursday. It was the 17th record low since the coronavirus started roiling financial markets last March.
Cheap borrowing costs - down more than a percentage point from a year earlier - have fuelled a pandemic housing boom that has pushed the country toward an affordability crisis as home prices rise swiftly and listings grow ever more scarce. Mortgage rates are poised to rise modestly this year, said Sam Khater, Freddie Mac's chief economist, potentially threatening the rally.
The market for loans may already be signaling a retreat, according to Matthew Pointon, US property economist at Capital Economics. While mortgage applications for home purchases were up almost 25 per cent last month from a year earlier, momentum has slowed from the peak in late November, he said, citing data from the Mortgage Bankers Association.
Pent-up demand from earlier in the pandemic has been exhausted and record-low inventory will discourage some would-be buyers, according to Mr Pointon.
The boost low rates are giving buyers, he said, "is wiped out by the surging house prices."
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