Mortgage rates fell to their lowest level in nearly five months, with an average 30-year loan of 2.9%.
The rate on Thursday fell from 2.98% last week and is the lowest since February 18, according to Freddie Mac. A year earlier, it was 3.03%.
Rates on 15-year fixed-rate mortgages – popular for refinancing – averaged 2.2%, up from 2.26% the previous week and 2.51% a year earlier.
The decline is due to a drop in the yield on 10-year Treasuries, which fell below 1.3% on Thursday for the first time since February amid fears by investors that the spread of Covid-19 variants will slow economic growth.
Lower borrowing costs have contributed to the housing pandemic. Mortgage rates have hovered around 3% for about three months after falling to an all-time low in January.
According to Greg McBride, chief financial analyst at Bankrate.com, the mortgage rate cut this week could prompt more homeowners to refinance their mortgages.
“It’s kind of a wake-up call for those who are putting it off,” he said. “This is a great opportunity for meaningful refinancing and lower mortgage rates.”