Mortgage rates sharply fell this week reaching a new record low. Following the trend of the 10-year Treasury yield, the 30-year fixed-rate mortgage dropped to average 2.81% this week from 2.87% the prior week.
During the pandemic, many Gen Zers and Millennials move back to their parents from large metro areas. In their effort to reduce the number of times being close to other people, these young adults move out of their apartments. With one out of two young renters (18-34 years old) spending above 30% of their income for housing, these young adults can save more than $1,000 on average every month. In the meantime, the median down payment for first-time homebuyers was 6%, according to the 2019 Profile of Home Buyers and Sellers. This translates to a down payment of $14,800 for the typical starter home. With mortgage rates to remain near 3% for the next couple of years, many of these young adults will be able to purchase a home. That being said, homebuying activity is expected to continue to stay strong for several more years.