30-Year Mortgage Rates Tumble to Record Low 3.23%

U.S. mortgage rates fell once again to the lowest on record.

The average rate for a 30-year loan was 3.23%, down from 3.33% last week and the lowest in almost 50 years of data-keeping, Freddie Mac said in a statement Thursday. The previous record was 3.29%, reached in early March.

The coronavirus outbreak has fueled chaos in the mortgage market. Rates had ticked slightly higher in recent weeks, in part because lenders were pricing mortgages defensively. They had more customers than they could handle with rates so low. Now, the slowdown in the economy has curbed demand for new loans while they work through the backlog.

“This is a sign that the mortgage market is functioning better,” said Keith Gumbinger, vice president at HSH.com, a mortgage information website. “The backlog of refinancing is working its way through the pipeline. So lenders are feeling more comfortable passing low rates to the consumers.”

The Federal Reserve, which cut its benchmark rate to near zero, has jumped in to help stabilize the mortgage market over the past few weeks, agreeing to buy an unlimited amount of mortgage-backed securities.

The pandemic-driven rush to the safety of Treasuries has helped push down borrowing costs, making home purchases more affordable for buyers who can qualify for a loan. It’s a group that’s getting smaller as the economic standstill puts tens of millions of Americans out of work. Even those with the means to buy have held back while hunkered down in quarantine.

Contracts to purchase previously owned U.S. homes plunged in March by the most since 2010, the National Association of Realtors said Wednesday.

Buying will bounce back as the economy slowly reopens, according to Lawrence Yun, the Realtors group’s chief economist. Still, he projects a 14% decline in home sales for the year.