Mortgage rates again fall to record low

For the 12th time this year, the average rate on the popular 30-year mortgage dropped to a record low, according to a Freddie Mac survey released Thursday, amid long-term intervention by the Federal Reserve to boost the housing market and a postelection rally in the stock market.

The average for a 30-year fixed-rate mortgage dropped to 2.78% from 2.81% with an average 0.7 point. (A point is a fee buyers pay, typically about 1% of the loan, to get a better rate.) The 2.78% average rate is well below the 3.69% level a year ago and was the lowest point since the quasi-government agency began conducting the survey in 1971.

The 15-year fixed-rate average remained at 2.32%, with an average 0.6 point. The five-year adjustable-rate average of 2.89%, with an average 0.3 point, was up from the 2.88% of the previous week. A year ago, the 15-year rate was 3.13% and the five-year was 3.39%.

"It's not surprising that rates hit another record low this week," said George Ratiu, senior economist with Realtor.com. "We've seen the stock market go massively up and massively down lately, even just this week, which means even more investors are moving to the bond market for safety and better returns."

"Given the fact that election results are still up in the air and legal challenges are already in place, this uncertainty will likely be with us for weeks or longer and that's not helpful in terms of stock market performance," Ratiu added. "The housing market is the bright hope and distraction from the challenges of 2020, which means investors are drawn to mortgage-backed securities."

Mortgage rates since March have fallen significantly, driven mainly by a Federal Reserve intervention designed to stabilize the housing market. The Fed has been attempting to bolster the market by purchasing mortgage-backed securities - bundled mortgages sold to investors. The Fed intends to stick with the policy until at least 2023, so mortgage rates should remain low for the long haul.