Mortgage rates drop even lower to new record of 2.65%

The average U.S. mortgage rate for a 30-year fixed loan fell two basis points this week to 2.65% – the lowest rate in the Freddie Mac’s Primary Mortgage Market Survey’s near 50-year history. This week’s mortgage rate broke the previous record set on Dec. 24.

With this week’s record drop, there have now been 22 consecutive weeks when average mortgage rates have been below 3%, and this is the 17th time this year rates have broken a record.

The average fixed rate for a 15-year mortgage also fell last week to 2.16% from 2.17%. A year ago at this time, the 15-year FRM averaged 3.07%.

Despite a full percentage point decline in rates over the past year, housing affordability is slipping as these low rates have been offset by rising home prices, according to Sam Khater, Freddie Mac’s chief economist.

“The forces behind the drop in rates have been shifting over the last few months and rates are poised to rise modestly this year. The combination of rising mortgage rates and increasing home prices will accelerate the decline in affordability and further squeeze potential homebuyers during the spring home sales season,” Khater said.


Low mortgage rates fuel the demand for valuation and settlement services  

VRM Mortgage Services CEO shares how the company is navigating a difficult year, and how its services are impacted by the different national, state and local directives on foreclosure.

Presented by: VRM Mortgage Services


This year’s record low rates may be setting a new norm.

Len Kiefer, Freddie Mac‘s deputy chief economist, noted every decade since the 1980s experienced a 2% drop decade-over-decade. With rates sitting at close to 12% nearly 50 years ago, declining patterns may mean 30-year mortgage rates could average 2% the rest of the 2020s.

“Even just a year ago, that didn’t seem probable, and it’s certainly not my baseline forecast, but we’d have to acknowledge that there is a chance rates could continue their secular decline,” Kiefer said.

However, news of Democrats having won control of the Senate on Tuesday has some economists shifting gears.

The prospects of increased spending and deficits will likely put upward pressure on mortgage rates as the year progresses, said Mortgage Bankers Association Chief Economist Mike Fratantoni. In turn, Fratantoni estimates the massive refinance wave lenders have been riding may be cut short.

Source: housingwire.com

Alongside rising yields, mortgage rates increase to 2.79%

The average mortgage rate for a 30-year fixed loan rose from its previous record low by 14 basis points this week to 2.79%, according to Freddie Mac’s Primary Mortgage Market Survey. This marks the first time mortgage rates have risen in almost two months.

The 15-year fixed rate also rose slightly this week from 2.16% to 2.23%.

Even with this week’s uptick, there have still been 23 consecutive weeks when average mortgage rates have been below 3%.

According to Sam Khater, Freddie Mac’s chief economist, rising treasury yields have been putting pressure on rates to finally move up again.

“While mortgage rates are expected to increase modestly in 2021, they will remain inarguably low, supporting homebuyer demand and leading to continued refinance activity,” Khater said. “Borrowers are smart to take advantage of these low rates now and will certainly benefit as a result.”

And take advantage they have.


Leveraging eClosings to effectively manage increased loan volumes

With no end in sight to record low mortgage rates and the increased loan volume, lenders must streamline workflows and accelerate time to close. Evolving from traditional closings to hybrid closings to full eClosings can help lenders process more loans at a faster pace without overwhelming their resources.

Presented by: SimpleNexus

Mortgage applications jumped 16.7% last week according to the Mortgage Bankers Association, and refi’s hit a massive 93% year-over-year mark as government loans experienced their strongest week in nearly eight years.

The jump underlines the seasonality behind the decrease in mortgage rates the week prior, coupled with expectations of additional fiscal stimulus from the incoming administration, according to MBA Associate Vice President of Economic and Industry Forecasting Joel Kan.

While purchase borrowers have been scrambling for months now to battle it out for the lowest possible rate on the limited inventory available, the Federal Reserve may have given borrowers until the end of 2021 to snap one up.

In a speech on Friday, Fed. Vice Chairman Richard Clarida said he expects the central bank to maintain the pace of its bond purchases through 2021. Those purchases are what prevented a credit crunch and made borrowing cheaper back in March.

Now, at an average of $120 billion a month — split between $80 billion in Treasuries and $40 billion in MBS — Fed holdings have surpassed $7 trillion, and Clarida doesn’t see a pullback anytime this year.

Source: housingwire.com