The mortgage market had reacted favorably to the Coronavirus threat. Now that the trend is reversing, we may see a partial correction in the mortgage market. It is nothing new. Global threats that loom suddenly bring about economic movements with it and just as soon as the threats disappear, the money movement returns to its initial levels. The refinancing activity and demand for homes are on a move in the meantime, buoyed by near-record interest rate levels.

Mortgage Rates: rates decrease all around

This week’s Mortgage Banking Associations’ (MBA) weekly rate survey reveals a decrease across the board.

According to the MBA Weekly Survey: “The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.81 percent from 3.87 percent, with points increasing to 0.28 from 0.27 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.”

1 point in cost = 1% of the loan amount

“ The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) decreased to 3.78 percent from 3.87 percent, with points decreasing to 0.20 from 0.21 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.”

“The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.24 percent from 3.25 percent, with points remaining unchanged at 0.22 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.” 

“The average contract interest rate for 5/1 ARMs decreased to 3.15 percent from 3.29 percent, with points decreasing to 0.12 from 0.25 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.”

Mortgage Rate Activity and Predictions

The Bankrate’s weekly survey of mortgage and economic experts, countrywide, reveals that over the coming week (30th January to 5th February), experts are nearly equally drawn between “rates will remain unchanged” and “rates will fall”. There are, however, very few takers for a rate hike.

Out of those surveyed, 10% feel rates will move up, 50% sense that rates will come down while 40% of the experts feel rates will remain unchanged (with a maximum movement of two basis points either side).

Freddie Mac’s weekly mortgage survey has reported that the conforming rates for the week- 24th January to 30th January- have come done by 0.09% for 30-Y FRM and by 0.04% for 15-Y FRM.

Freddie Mac’s weekly mortgage survey noted, “This week’s mortgage rates were the second lowest in three years, supporting homebuyer demand and leading to higher refinancing activity. Borrowers who take advantage of these low rates can improve their cash flow by lowering their monthly mortgage payments, giving them more money to spend or save.”

Mortgage Rate Lock Advice

I would recommend you to Lock if you are closing within the next 3 weeks and Float if you are closing any time beyond it.

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