Average rates for 30-year mortgages in the United States fell to a record low this week, U.S. mortgage finance firm Freddie Mac said on Thursday.
The 30-year fixed-rate mortgage averaged 2.86 percent for the week ending Sept. 10, down from last week when it averaged 2.93 percent, according to Freddie Mac. That was the lowest level in the firm’s survey history dating back to 1971.
“Mortgage rates have hit another record low due to a late summer slowdown in the economic recovery,” Sam Khater, Freddie Mac’s chief economist, said in a statement.
“These low rates have ignited robust purchase demand activity, which is up twenty-five percent from a year ago and has been growing at double digit rates for four consecutive months,” Khater said.
Despite the pandemic, the housing market has become a bright spot in the U.S. economy due to record-low borrowing costs, with homebuilding and purchase activity surging in recent months.
However, heading into the fall, it will be difficult to sustain the growth momentum in house purchases “because the lack of supply is already exhibiting a constraint on sales activity,” according to Khater.
Loretta Mester, president of the Federal Reserve Bank of Cleveland, said last week that U.S. economic recovery remains “fragile,” requiring further fiscal support to move into a “more sustained recovery” phase from the reopening phase.
The U.S. Senate on Thursday failed to advance a slimmed-down Republican COVID-19 relief proposal, as lawmakers remain deadlocked over the scope and size of the much needed stimulus bill.
Economists have warned that the U.S. economy is at serious risk of sliding back into recession if the White House and Congress couldn’t reach a deal on another fiscal rescue package in the coming months.