Mortgage rates edged higher for the second week in a row due in part to increased secondary market volatility, lenders coping with volume issues and backlogs in their pipelines, and remote work staffing challenges, reports the Mortgage Bankers Association (MBA). The 30-year fixed-rate mortgage rose to 3.82%, up eight basis points from the previous week to the highest level since mid-January. Mortgage applications declined as rates edged higher. The Market Composite Index fell 29%, Purchase Index fell 15% while the Refinance Index declined 34%. However, rates still remain historically low.
Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting said, "Looking ahead, this week's additional actions taken by the Federal Reserve to restore liquidity and stabilize the mortgage-backed securities market could put downward pressure on mortgage rates, allowing more homeowners the opportunity to refinance."
The ongoing coronavirus health problems continue to plague the U.S. with the economic fallout also another major obstacle. In the housing industry, the sector's biggest trade and lobbying groups have banded together to try to head off mortgage payment delinquencies. With many Americans either laid off or close to being let go, missed mortgage payments could quickly become a major problem. Industry groups have reached out to the government to provide mortgage payment forbearance and longer-term loan modifications to borrowers affected by the coronavirus. Forbearance periods could be from 3 to 12 months.