Mortgage costs have tumbled after the Federal Reserve slashed interest rates to nearly zero

Mortgage rates in the U.S. tumbled to historic lows in the week ended July 16.

The rate on a 30-year fixed mortgage dropped to 2.98 percent, falling below the 3 percent level for the first time since record-keeping began in 1971, according to mortgage investor Freddie Mac.

Meanwhile, the 15-year fixed mortgage rate slid to a fresh low of 2.48 percent while a 5-year hybrid adjustable-rate mortgage had a rate of 3.06 percent, up slightly from last week’s reading of 3.02 percent.

The drop in rates has “led to increased homebuyer demand,” according to the weekly report from Freddie Mac, which was created by Congress and supports the housing market by purchasing home loans from banks.

The report noted that new COVID-19 infections have been a “countervailing force,” causing the economic recovery to stagnate and putting jobs at risk.

Rock- bottom mortgage rates have been a result of the Federal Reserve cutting interest rates to nearly zero to support the U.S. economy amid its sharpest slowdown of the post-World War II era.

The U.S. economy contracted by 5 percent during the first quarter and is expected to have shrunk by more than 30 percent in the three months through June as shutdowns aimed at slowing the spread of COVID-19 forced non-essential businesses to close their doors.

More than 51 million Americans have filed for unemployment claims since the outbreak began.

Author: Jonathan Garber

Source: Fox Business: 30-year fixed mortgage rate drops below 3% for first time

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