30-year mortgage rate up a bit from record low
WASHINGTON — U.S. long-term mortgage rates were mixed this week after hitting alltime lows last week amid anxiety over risks to the economy from the deepening coronavirus crisis.
The average rate on the benchmark 30-year loan rose to 3.36% from 3.29% last week, which was the lowest level since mortgage buyer Freddie Mac — the Federal Home Loan Mortgage Corp. — started tracking it in 1971.
The average rate on the 15-year fixed-rate mortgage slipped to 2.77% from 2.79% last week.
Financial markets continued to shudder Thursday amid a cascade of cancellations and shutdowns across the globe due to the covid-19 virus, and rising worries that the Trump administration, Congress and other authorities around the world can’t or won’t help the weakening economy any time soon.
The decline in mortgage rates has been driven by investors shifting money out of the stock market and into the safety of U.S. Treasurys as the crisis in confidence around the global viral outbreak has worsened. Long-term mortgage rates tend to track the yields on the 10-year Treasury note, so they typically fall in tandem.
For the second time this week, U.S. stock prices tumbled so sharply at the opening bell Thursday that a circuit breaker meant to slow panic trading was triggered on Wall Street, halting all activity for 15 minutes. The Dow Jones Industrial Average closed in a bear market Wednesday for the first time in more than a decade. The average on Thursday closed down more than 2,300 points, or about 10%, while the broader Standard & Poor’s 500 index was off around 9.5%.
The record low mortgage rates have been a boon to potential homebuyers, and they give many homeowners an opening to refinance into lowerrate loans to free up money to spend or save.
But prospective buyers may be reticent to shop for homes amid the coronavirus outbreak, seeking to avoid social contact, experts note. That could slow home sales. And ultra-low mortgage rates aren’t likely to produce a significant rise in home sales this year because the supply of homes for sale remains at historic lows.
Each week, Freddie Mac surveys lenders to compile its national mortgage rate figures. The average doesn’t include extra fees, known as points, which most borrowers must pay to obtain the lowest rates.
The average rate for a fiveyear adjustable-rate mortgage dropped this week to 3.01% from 3.18% last week.
The historically low rates have fueled unprecedented demand up to now, making the industry a bright spot as the U.S. economy is battered by the expanding outbreak. Loan application records were being shattered at lenders such as United Wholesale Mortgage, Guild Mortgage and Quicken Loans Inc., the nation’s largest mortgage lender. Internet searches for refinancing this month spiked to their highest levels in data going back to 2004, according to Google Trends data.
Last week, a measure of U.S. home-refinancing applications soared to the highest level since April 2009.
For a typical 30-year, fixedrate $250,000 mortgage, borrowers could save about $150 a month if they refinanced at 3.25% compared with what they were paying last year, said Tendayi Kapfidze, chief economist at online marketplace LendingTree.
Michigan-based United Wholesale has approved numerous 30-year fixed-rate loans at 2.75%, said Alex Elezaj, its chief strategy officer.
Some lenders have stopped accepting refinance applications altogether, while others are telling their employees to not make more than two loans per day, according to Elezaj. His firm has kept processing times at about 12 business days.
“A lot of the market isn’t set up to handle this increase,” he said.
Most mortgages eventually are sold to government-backed lenders, such as Fannie Mae — the Federal National Mortgage Association — and Freddie Mac, which then package those loans into bonds sold to investors. There’s a limit to investors’ appetite to own 30-year fixedrate mortgages yielding 3% or less, said Brian Koss, executive vice president at Massachusetts-based Mortgage Network Inc., whose firm received more refinancing applications in four days last week than it typically receives in a month.