WASHINGTON, DC - Mortgage rates fell to another record low last week, for the 14th time this year.
The average interest rate on a 30-year fixed-rate mortgage dropped to 2.71%, according to Freddie Mac. That's the lowest level in the nearly 50 years of the mortgage giant's survey. The 15-year fixed-rate mortgage dropped to 2.26%.
Despite persistently low mortgage rates, home sales have hit a wall, said Sam Khater, Freddie Mac's chief economist.
"While homebuyer appetite remains robust, the scarce inventory has effectively put a limit on how much higher sales can increase," he said. "Unfortunately, the record low supply combined with strong demand means home prices are rapidly escalating and eroding the benefits of the low mortgage rate environment."
Record low interest rates have fueled this year's strong rebound and growth in housing markets, but low inventory remains a challenge for home buyers as it pushes prices higher.
"Low interest rates have helped homeowners refinance and save money, while simultaneously making it easier for first-time buyers to afford a home," said George Raitu, senior economist at Realtor.com. "However, double-digit price gains over the past three months have been chipping away at the benefit that low mortgage rates have brought."
For many Americans today, these low rates do not offer the same monthly savings that they did even six months ago, he said.
"Millions of people are staring at a wall of expiring support programs, such as the pandemic unemployment insurance and eviction protection, which dampen the brightness of the incoming holiday season," said Raitu. "While we see a light at the end of the pandemic tunnel with upcoming vaccines, there is still a big question around whether Congress can come to terms on a new stimulus package to help the country recover from the current economic downturn."