Instant Reaction: Mortgage Rates, October 22, 2020

Mortgage rates fell further this week, reaching a new record low for the second consecutive week. Specifically, the 30-year fixed-rate mortgage ticked down to an average 2.80% from 2.81% the previous week.

These ultra-low mortgage rates make homebuying more attractive, boosting activity to the highest level since 2006. According to NAR, in September, existing-home sales rose by 21% to 6.54 million. In the meantime, with each home sale, there are expenditures related to lawn care, home remodeling, new furniture, mortgage origination, moving, and building new homes. NAR estimates that every home sale contributes, on average, nearly $90,000 to the economy. Thus, strong homebuying activity spurs homebuilding and many durable consumer goods industries that boost economic growth. As a result, real estate is expected to play a very important role in the recovery of our economy.