Mortgage Rates Continue Dramatic Decline

Mortgage rates worldwide have declined for the past few months leading some insiders to discuss the possibility of negative interest rates on mortgages

Data from Freddie Mac shows that mortgage rates dropped to historically low levels three times in December and 16 times throughout the entire year. 

On Dec. 24, the 30-year fixed-rate average dropped to 2.66% with an average 0.7 point, down from 2.67% the previous week and 3.74% in the past year. The latest average is the lowest since Freddie Mac began tracking rates in 1971. 

15-year fixed-rate averages dropped to 2.19% with an average of 0.5%, down from 2.21% in the previous week and 3.19% in the last year. 

Meanwhile, five-year adjustable rates have remained relatively stable at 2.79 this month but decreased from 3.45% since January of this year. 

“Mortgage rates were little changed this week as markets digested the authorization of a second coronavirus vaccine and $900 billion stimulus package,” said Danielle Hale, chief economist for, to the Washington Post. “Taking a broader look, mortgage rates have steadily declined over the last 12 months and are currently more than a whole percentage point lower than this time last year.” 

The week between Christmas and New Years is historically quiet for the real estate industry as most lenders take the holidays off. However, this year the Mortgage Bankers Association reported that purchase applications increased significantly compared to last year. 

“Mortgage rates are closing the year at record lows….Overall refinance activity was 124 percent higher than in 2019, as borrowers continue to seek lower monthly payments or different loan terms,” said Joel Kan, MBA’s associate vice president of Economic and Industry Forecasting. 

Purchase applications decreased twice in a three week period as conventional and government applications saw a drop-off, according to Kan.

“Despite the decline, purchase applications remained 26 percent higher than the same week a year ago, and the average loan balance reached another record high,” said Kan.  

In a recent poll, Bankrate found that half of the experts surveyed expected rates to stay the same, while 40% expected them to rise. 

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