Average U.S. mortgage rates for a 30-year fixed rose to 2.96% this week from an all-time low of 2.88%, Freddie Mac said in a report on Thursday.
The average 15-year rate rose to 2.46% from 2.44% last week, according to the mortgage financier.
“Even with this week’s uptick, very low rates are providing a significant boost to the housing market that continues to hold up well during this time of uncertainty,” said Sam Khater, Freddie Mac’s chief economist.
Mortgage rates have tumbled during the COVID-19 pandemic, bolstered by Federal Reserve purchases of Treasuries and mortgage-backed securities.
U.S. existing-home sales rose 21% in June, the biggest monthly gain on record, and the median home price rose 3.5% from a year ago, the National Association of Realtors said in a July 22 report.
Cheaper interest rates are making more Americans eligible to purchase a home because lenders qualify applicants by comparing monthly mortgage payments to income. When financing costs go down the payment shrinks. That also means borrowers find they qualify for larger mortgages, which means they can pay more for a property they want.
“Homebuyer demand remains strong, especially for those in search of an entry-level home where the improvement in affordability via lower mortgage rates has a material impact,” said Khater.
Rates are expected to remain low through 2021 as the U.S. struggles with the economic fallout from the pandemic, according to a forecast from Fannie Mae.
The average 30-year fixed rate likely will be 3.2% this year and fall to 2.8% in 2021, the mortgage giant said in a forecast last month. In 2019, the average rate was 3.9%.