Mortgage Lending Outlook: July Rates Will Not Change (Analysis)

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Holden Lewis | NerdWallet

Forecast mortgage rates for July

I think that in July mortgage rates will remain about the same. The average monthly rate on a 30-year fixed-rate mortgage will range from 2.8% to 3% per annum. This is within one tenth of a percentage point on either side of the June average of 2.9%. I think that in this range, they are more likely to go up than down.

In June, it seemed that mortgage rates were insulated from the boisterous economic reports, and this could continue into July.

What happened in June

In early June, I predicted that mortgage rates would rise slightly. But the 30-year fixed-rate mortgage has dropped. The monthly average fell from 2.94% in May to 2.9% in June.

June was marked by a disappointing employment report, news of rising inflation and a message from the Federal Reserve that it could start raising short-term rates in 2023. None of this news had a significant impact on mortgage rates. I expected the Fed’s announcement to raise mortgage rates higher than it did.

Regulators update ransom protection

The foreclosure moratorium has been extended to July 31 for mortgages granted by Fannie Mae, Freddie Mac, the Federal Housing Administration and the Department of Veterans Affairs. Once the moratorium ends, mortgage services will have to make a good faith effort not to foreclose homeowners who delay mortgage payments.

The Consumer Financial Protection Bureau described these necessary good faith efforts in a regulation published in late June. Among the recommendations:

  • Mortgage services must inform non-paying borrowers about abstinence programs if they have not already signed up for them.
  • Service professionals should provide delinquent borrowers with information about homeownership counseling.
  • The CFPB will allow mortgage service providers to offer Covid-19 related loan modifications based on incomplete applications.

This last rule can prevent some foreclosures because violating borrowers do not always respond to subsequent requests for more information following a mortgage relief request.

We didn’t have a housing disaster this time

These rules, along with moratoriums on alienation and evictions, serve as proof that regulators have learned important lessons from the housing crisis that began in 2007 and 2008. There was a political debate then about whether to save delinquent homeowners from foreclosure with mortgage modifications.

Many have argued that it would be preferable to allow millions of homeowners to lose their homes than to offer financial assistance so they can keep them. It was believed that if homeowners were bailed out, they would not learn any lessons and take unnecessary risks in the future. It’s like refusing to help the victims of a boat crash due to not wearing life jackets when they fell into the water.

Help for distressed homeowners came in 2009 through the Affordable Home Improvement Program, but for many homeowners the initiative was too late. The avalanche of foreclosures foreclosures foreclosures foreclosures foreclosures property foreclosures have caused house prices to fall. Home sales fell sharply as potential buyers waited for prices to fall further.

A decade ago, today’s pandemic protection measures could have been considered over-nursing homeowners. But the initiatives seem to work, keeping people in their homes.

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Holden Lewis writes for NerdWallet. Email: hlewis@nerdwallet.com… Twitter: @HoldenL



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