Rates Tick Up, Refis Remain Strong as Industry Responds to Coronavirus
Despite the record-lows that mortgage rates hit earlier this month, overall market volatility has caused them to spike once again. Rates on 30-year mortgages jumped to 3.74% this week, up from 3.47% the week prior.
Rates are still low, historically speaking, and homeowners are refinancing in droves to take advantage. Refinance applications accounted for nearly three-quarters of all mortgage activity last week. Refinancing is now up 402% from one year ago.
Here’s what Joel Kan, associate vice president of economic and industry forecasting for the Mortgage Bankers Association, has to say about it: “The ongoing situation around the coronavirus led to further stress in the financial markets late last week, with unprecedented volatility and widening spreads. This drove mortgage rates back up to their highest levels since mid-February and led to a 10% decrease in refinance applications. However, refinance activity remains very high.”
Purchase loan applications were up 11% over the year, though they dipped 1% for the week.
More in Mortgage and Housing News
- It appears the administration is considering measures to help homeowners whose incomes have been affected by the coronavirus outbreak. According to a report from Bloomberg, qualifying mortgage borrowers may be able to delay payments if these measures are enacted.
- The Federal Reserve cut its federal funds rate to zero this week in an attempt to provide the American economy a boost as COVID-19 continues to spread. The Fed also committed to purchasing $200 billion in mortgage-backed securities to further bolster the housing market.
- Homebuilder confidence dropped this month, but only ever so slightly. About 21% of builders are reporting some sort of supply disruption as a result of coronavirus.
- To encourage social distancing, a number of real estate brokerages have moved to virtual showings, including Keller Williams and Redfin. The National Association of REALTORS® also released guidelines for agents this week, detailing how to interact with clients, properly sanitize properties, and whether to conduct open houses amidst the current coronavirus climate.
The Week in Mortgage Rates
Mortgage rates increased on all loan types last week. Here’s how rates changed on each product:
- All 30-year, fixed-rate loans: 3.74%, 0.37 points
- Jumbo 30-year, fixed-rate loans: 3.77%, 0.32 points
- FHA 30-year, fixed-rate loans: 3.71%, 0.28 points
- 15-year, fixed-rate loans: 3.10%, 0.37 points
- 5/1 ARMs: 3.19%, 0.19 points
Check back here next week for the latest interest rate and mortgage news updates.
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