Mortgage Rates Fall to 2017 Lows*
Mortgage rates declined last week to their lowest level in 2017, a move that could help fuel buyer demand at a time when the supply of homes already is under strain.
The rate for a 30-year mortgage fell to 3.88% in the week ended Thursday, down from a week earlier when it averaged 3.9%. That was well above a year ago, when it averaged 3.48%.
Economists had widely predicted mortgage rates to rise to around 4.5% by the end of this year. That looks increasingly unlikely. Dimming prospects for the Republican legislative agenda, especially tax reform, have helped keep a ceiling on rates.
Lower rates typically lead to an increase in refinancing activity, although after several years in which rates have hovered near historic lows there are a limited number of homeowners who could refinance to a significantly lower rate.
Cheaper mortgages can also help bring buyers off the sidelines by making homes slightly more affordable.
But that increased demand is likely to bump up against a lack of for-sale supply. The National Association of Realtors Pending Home Sales Index—a forward-looking indicator of housing demand—tumbled 0.8% in May, the third consecutive decline. That suggests sales might be topping off due to limited options to buy.