(Bloomberg) -- Mortgage rates in the U.S. dropped to another record low, adding fuel to a housing market that’s been a key source of strength for the pandemic economy.
The average for a 30-year, fixed loan was 2.86%, down from 2.93% last week and the lowest in almost 50 years of data-keeping by Freddie Mac (OTC:FMCC). It was the ninth time since the coronavirus stated roiling financial markets that rates fell to a new low. The previous record, 2.88%, was reached in early August.
Cheap mortgages have ignited a housing rebound, driving sales of both new and existing homes and putting money back into the pockets of borrowers who have been able to refinance.
Still, the rally faces challenges from persistent job losses and an inventory shortage that’s pushing up prices, reducing the pool of people who can afford to buy a house.
“Heading into the fall, it will be difficult to sustain the growth momentum in purchases because the lack of supply is already exhibiting a constraint on sales activity,” Sam Khater, Freddie Mac’s chief economist, said in a statement Thursday.
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