WASHINGTON (AP) — Long-term U.S. mortgage rates fell this week as the key 30-year home loan marked an all-time low for the third time in the last few months since the coronavirus outbreak took hold.
Mortgage buyer Freddie Mac reported Thursday that the average rate on the 30-year loan tumbled to 3.15% from 3.24% last week. It was the lowest level since since Freddie started tracking rates in 1971. A year ago, the rate stood at 3.99%.
The average rate on the 15-year fixed-rate mortgage declined to 2.62% from 2.70% last week.
Spurred by the fall in borrowing rates, demand for home purchases by prospective buyers has rebounded from a decline of 35% in mid-April to an 8% increase as of last week, Freddie economists noted.
Sales of existing homes plunged 17.8% in April, the slowest pace since 2011, reflecting the economic damage from the virus that shut down wide swaths of business and social life. The normally busy spring homebuying season has been upended. At the same time, home prices have been rising.
Bleak economic data, meanwhile, continues to pour in. A government report Thursday showed that the U.S. economy shrank at an even faster pace in the first three months of the year than initially estimated. Economists expect a far worse outcome in the current April-June quarter.
The government also reported that 41 million Americans have applied for unemployment benefits since the outbreak intensified in March, though not all are still unemployed. An estimated 2.1 million filed for benefits last week despite the gradual reopening of businesses around the country.
In a glimmer of hope, the overall number of people currently drawing jobless benefits fell for the first time since the crisis began, from 25 million to 21 million, suggesting that some companies are starting to rehire.