Mortgage rate plunges 10 pips amid COVID-19 concerns, FHFA news

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Average rate on fixed rate mortgages for 30 years dropped fourth week in a rowas growing concerns about a COVID-19 resurgence and a recent FHA regulation change have driven rates down.

According to Freddie Mac’s primary mortgage market research, the 30-year fixed interest rate fell 10 basis points in the week ending July 22 – the sharpest drop in one week this year – from 2.88% to 2.78%. Over the same period a year ago, the average was 3.01%.

As the delta variant is causing a second spike in COVID-19 across the country, the Federal Reserve suggested that the increase in cases could crush the resurgent U.S. economy… News of the spread and severity of this option drove investors to the bond market, which affected mortgage rates.

“Concerns about the delta option and the overall trajectory of the pandemic are undoubtedly affecting economic growth,” Sam Hather, chief economist at Freddie Mac, said in a press statement. “As the economy continues to recover, Treasury yields have declined and mortgage rates have followed suit.”

But what was usually considered good news for borrowers was held back by the ongoing lack of vacant houses, according to Hather. “Unfortunately, many homebuyers cannot take advantage of the low rates due to low stock levels and high prices.”

The rate cut was also helped by the announcement on Friday that the FHFA will cancel the 50 basis points commission on loans sold to Fannie Mae and Freddie Mac. The regulation, added last year to protect GSE during the pandemic, calls for $ 1,400 to refinance loans. The US government also introduced a similar fee in 2008, when the country was in the throes of the Great Recession. According to Zillow economist Matthew Speakman, the announcement of its removal resulted in an immediate – and sharp – drop in mortgage rates.

“While rate cuts have changed slightly over the past couple of days, this week is the latest in bearish pressures that have kept mortgage rates at bay, even as the economy continues to melt due to the pandemic freeze,” he said. written statement.

15 year rate also falls
Just as the 30-year fixed rate fell, the 15-year fixed rate on mortgages also fell 10 basis points, down to 2.12% from 2.22% a week earlier. The rate for the same week last year was 2.54%.

The Treasury-indexed five-year adjustable rate mortgage has gone in the opposite direction, climbing for the first time in three weeks. The ARM 5/1 average was 2.49%, up from 2.47% in the previous week. In the same week of 2020, adjustable rate mortgages averaged 3.09%.





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