BALTIMORE -- Rates on 30-year mortgages have fallen to record lows for the third consecutive week as inflation remains muted in a weakened economy, even in the face of persistent demand from homebuyers.
Mortgage buyer Freddie Mac reported Thursday that the average rate on the key 30-year fixed-rate mortgage declined to 3.03%, down from 3.07% last week and 3.13% two weeks before. These were the lowest levels since Freddie Mac began tracking averages in 1971. The rate averaged 3.75% a year ago.
The average rate on the 15-year fixed-rate mortgage also dropped to 2.51%, from 2.56%, last week. That average is down from 3.22% a year ago.
Analysts have said rates could dip below 3% this year.
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Rates have plunged as the Federal Reserve holds its benchmark rate near zero and buys mortgage bonds as part of its plan to stimulate the economy.
Rates are making homes more affordable as potential buyers, who had been shut in, appear to be returning to the market. Pending home sales jumped a record 44.3% in May as a comeback appears to be building in the sector, according to the National Association of Realtors.
Low borrowing costs have fueled demand for homes, even with the pandemic battering the economy. Americans stuck at home have been looking to trade up for more space, while a shortage of available inventory has helped prop up prices.
Social-distancing measures kept some buyers and sellers on the sidelines in recent months, but the market is bouncing back, according to Lawrence Yun, chief economist at the National Association of Realtors.
"The residential market has seen a swift rebound of activity as numerous states have begun to ease mandatory stay-at-home orders," Yun said in a statement.
Information for this article was contributed by Josh Boak of The Associated Press and by Craig Giammona of Bloomberg News.