Short answer. The lowest annual average 30-year fixed mortgage rate in U.S. history was 2.96% in 2021. The weekly low was 2.65%, set in early January 2021.
The 2021 annual average of 2.96% is the lowest reading in the 50+-year Freddie Mac PMMS series. Mortgage rates spent most of 2020 and 2021 below 3% — an unprecedented sustained low driven by the Federal Reserve's pandemic response.
Why did rates go so low?
In March 2020 the Fed cut the federal funds rate to 0–0.25% and announced unlimited quantitative easing, including $40B/month of mortgage-backed-securities purchases. By late 2020, the Fed was buying $40B+ in MBS every month — creating sustained downward pressure on mortgage rates that lasted into 2022.
What about earlier lows?
Before 2020, the lowest 30-year fixed rate in the modern era was 3.66% in 2012 — an artifact of the Fed's QE3 program. Pre-2012, rates had not dropped below 5% in the PMMS series.
Will rates return to 3%?
The 2.96% low was the product of a once-in-a-century pandemic-response monetary regime. A return to 3% would require a comparable shock — likely a recession deep enough to push the federal funds rate back to zero. Mortgage analysts generally see a long-term equilibrium rate of 5.5–6.5% under normal conditions.
Sources
U.S. Census Bureau Survey of Construction; National Association of Realtors Existing Home Sales report; Freddie Mac Primary Mortgage Market Survey; National Bureau of Economic Research Business Cycle Dating Committee.