According to the company's latest report, average fixed rates on 30-year mortgages closed at 3.6%, claiming its fourth-lowest rate in history. This demonstrates that access to home financing is becoming increasingly affordable for more people.
The record-low interest rates are largely attributed to a global economic slowdown sparked by the United Kingdom's decision to leave the European Union (EU), as well as the U.S.-China trade war. This decrease in consumer confidence and weaken economic outlook have caused bond yields and mortgage rates to remain low. Homeowners can capitalize on these favorable conditions if they have the opportunity to refinance their mortgage loan.
In addition to being the fourth-lowest rate ever recorded, Freddie Mac also reported that its mortgage origination volume for the same period reached $1.7 trillion, a near-record high. This indicates that Americans are taking advantage of the current market conditions to purchase or refinance their homes. The increased activity bolsters neighboring housing markets and provides more jobs for mortgage lenders and other related businesses.
The company also noted that demand for conforming loans, which account for 85% of its mortgage originations, has remained steady despite a decrease in other loan types. Freddie Mac's single-family business also ends the year on a positive note, with the number of new mortgage originations jumping 6% compared to last year. The increase in originations not only helps homeowners secure a better mortgage, but also many lenders in the process.
Overall, Freddie Mac's report suggests that access to affordable home finances is increasing for homeowners. The current economic situation has made it easier for consumers to take advantage of lower mortgage rates. The increase in loan originations indicates that many Americans are using this opportunity to purchase or refinance their homes. This is positive news for lenders and the housing industry as a whole and demonstrates the power of current economic trends.
In summary, Freddie Mac’s 2019 fiscal year was a huge success as it reported the fourth-lowest average fixed rate on 30-year mortgages ever, with rates dropping to 3.6%. This development is largely due to a global economic slowdown caused by the UK leaving the EU and the US-China trade war. As a result of the favorable market conditions, loan originations surged to a near-record high of 1.7 trillion dollars while conforming loans made up 85% of those originations. While mortgage rates remain low, it looks like many Americans are taking advantage of the opportunity to purchase or refinance their homes, helping lenders and housing markets in the process.
This article was contributed on Nov 03, 2023