The 30-year fixed mortgage rate is almost at rock bottom, sitting only one-quarter percentage point above its all-time low. Low rates traditionally spark buyer activity and help heat up the housing market, which is what the industry has seen so far: December homebuying power was 12.5 percent higher than last year. But if they stay down for an extended period of time, low rates can actually incentivize homeowners to stay in their homes for longer because they have locked in low rates. This in turn slows down the return of previously owned homes to the market, which could deepen the housing shortage and push prices up for potential homebuyers in the long run.
Mortgage rates slid to the lowest level in three months this past week. But the persistent low-rate environment could have some repercussions for people looking to buy a home.
The 30-year fixed-rate mortgage averaged 3.6% during the week ending Jan. 23, down five basis points from the previous week, Freddie Mac reported Thursday.
The 15-year fixed-rate mortgage also fell five basis points to 3.04%, according to Freddie Mac. The 5/1 adjustable-rate mortgage, meanwhile, dropped a 11 basis points to an average of 3.28%.
Mortgage rates are now at their lowest level since October. The 30-year fixed-rate mortgage now only stands one-quarter percentage point above its all-time low.