Mortgage rates again dropped to a fresh low, marking the 16th time they have sunk to a new record in 2020 and underscoring the unprecedented year for rates.

“The housing market is poised to finish the year strong as low mortgage rates continue to field homebuyer demand and refinance activity,” said Sam Khater, Freddie Mac’s chief economist, in a statement.

The rate on the 30-year fixed mortgage — the most common home loan — fell to 2.66% this week, down from the previous low of 2.67% reached last week, according to Freddie Mac, a government agency that guarantees millions of mortgages. A year ago, the rate was more than a percentage point higher at 3.74%.

Current homeowners are the most likely to reap the benefits of low rates, experts said, while homebuyers — especially first-time ones — contend with low housing inventory.

‘The pay raise that didn’t materialize in 2020’

As the economy remains on shaky footing while the coronavirus pandemic surges, low rates can act as a financial cushion for existing homeowners.

“Record low mortgage rates … has helped millions of households refinance mortgages to generate meaningful monthly savings,” said Greg McBride, chief financial analyst at Bankrate. “Trimming the mortgage payment by $150, $200, or $250 per month could be the pay raise that otherwise didn’t materialize in 2020.”

But for new homeowners on the hunt for properties, the year ahead is a less optimistic picture.

"It continues to be great news for home buyers regarding financing,” said Lawrence Yun, chief economist at the National Association of Realtors. “However, there are simply not enough homes on the market. Unlike past winter seasons when home sales would take a breather, this winter could be extra competitive among buyers."

Unsold inventory sits at an all-time low of a 2.3 months of supply, according to a recent NAR report, raising the competitive bar for first-time homebuyers.

“In my local market of southeast Michigan, we are seeing homes in good or as-is condition flying off the market if priced well,” said Jason Gellos, a. real estate agent at Community Choice Realty. “Some homebuyers are even waiving to have a home inspection.”

Record low rates may also usher in 2021, McBride said.

“It is a very real possibility that rates dip a bit more in coming weeks given the deteriorating economic metrics we’ve seen,” McBride said. “Next year will continue to be an environment of low rates, even as we see economic improvement, with increases potentially tempered should the Federal Reserve buy more long-term bonds and mortgage bonds.”