Mortgages hit another historic low – RISMedia |
Freddie Mac recently released the results of his Primary Mortgage Market Survey®, which showed that the 30-year fixed-rate mortgage is on average 2.86 percent – the lowest in survey history, which dates back to 1971.
Here is the breakdown:
30 year fixed rate mortgage
Average of 2.86 percent with an average of 0.8 points for the week ending September 10 – down from 2.93 percent last week. A year ago, the 30-year average was 3.56%.
15 year fixed rate mortgage
Average of 2.37% with an average of 0.7 points, down from 2.42% last week. Last year, the 15-year average was 3.09%.
5-year adjustable rate hybrid mortgage indexed to the treasury
On average 3.11 percent with an average of 0.2 points – an increase from 2.93 percent last week. Last year, the 5-year average was 3.36%.
“Mortgage rates hit another record high due to a slowing economic recovery at the end of the summer,” said Sam Khater, chief economist at Freddie Mac. “These low rates have triggered strong buying demand, which is up 25% from a year ago and has increased at double-digit rates for four consecutive months. However, with the approach of autumn, it will be difficult to maintain the momentum of growth in purchases because the lack of supply is already a constraint on commercial activity. “
How are other factors surrounding the mortgage industry affected by the coronavirus? Mortgage Bankers Association (MBA) Mortgage Availability Decreased in August, with Ellie Mae’s AllRegs® Market Clarity® Tool Down 4.7% to 120.9, Indicating Standards Are Tighter .
According to MBA, the benchmark was 100 in March 2012. The conventional MCAI declined 8.7 percent, while the government MCAI declined 1.4 percent.
“The supply of mortgage credit has fallen to its lowest level since March 2014, due to a reduction in supply from the conventional and government segments of the market,” said Joel Kan, associate vice president of MBA for economic and industrial forecasts. In addition, the compliant and jumbo sub-indexes have fallen almost 9% each, with the compliant index falling to the lowest level since the start of the MBA series in 2011. Credit continues to tighten due to the uncertainty that still hangs over the health of the labor market, even if other data on loan applications and home sales show a strong rebound. A further reduction in loan programs with low credit scores, high LTVs and reduced documentation requirements also continued to lead to the general decline in credit availability. “
Kan added, “Jumbo credit availability has fallen by around 59% since the pre-pandemic months, and data from the Weekly MBA Applications Survey showed jumbo mortgage rates remained over 30 points. base above consistent rates in August, which is another indication of investor appetite for these loans. “
Despite these challenges, however, mortgage applications are on the rise and forbearance rates are falling. According to the MBA on Forbearance and Appeal Volume, the total number of forborne loans fell by four basis points, from 7.20% to 7.16% as of August 30. That means about 3.6 million homeowners are currently on forbearance plans, according to the MBA. .
In some segments, however, the road to recovery is slower.
“Ginnie Mae’s share of forbearance increased further this week as the current economic crisis continues to disproportionately impact borrowers with FHA and VA loans. As a result, IMB managers, who hold about a third of their portfolio with Ginnie Mae, had an unchanged forbearance, while custodians, who hold a larger share of GSE and portfolio loans, saw a decline. Said Mike Fratantoni, Senior Vice President and Chief Economist of the MBA. “The labor market continued to heal in August, with strong job growth and a sharp drop in the unemployment rate. However, the economy is still facing a boom and remains far from full employment. The high unemployment rate and still jobless claims of around $ 1million per week continue to cause financial strains for some borrowers – and especially those working in sectors hardest hit by the pandemic. “
In terms of mortgage applications, they were up 2.9% from the previous week for the week ending September 4. On an unadjusted basis, the Composite Market Index increased 2% from the previous week and the Refinance Index increased 3%. 60 percent more than the same week a year ago. The seasonally adjusted purchasing index rose 3% from the previous week and, unadjusted, increased 0.2%, or 40% more year-on-year.
“The drop in rates has led to a rebound in refinancing activity, driven primarily by borrowers seeking conventional loans,” said Joel Kan, MBA associate vice president for economic and industrial forecasting. “Purchase requests were 40 percent higher than the same week last year, but the increase is skewed from Labor Day 2019. Nonetheless, there is still resilience in the market. purchase. Applications increased nearly 3% on a weekly basis and the average loan amount continued to rise, reaching a high of $ 368,600. “