Starting off the month of April 2020 mortgage rates are higher when compared to the all time lows achieved during the first week in March. The reasons for this include; too many applications were received, market volatility and Fed action. All three are playing a role in consumer mortgage rates.
For the latest April 2020 mortgage rates please be sure to our updated rate listings.
Too Many Applications:
On a good day the mortgage industry takes in about $1 to $1.5 billion worth of new loan volume. Not of that gets funded but non-the-less it's a significant amount. From late February to early march the industry was taking in five to ten times that on a daily basis. A huge amount of volume. Applications were wide ranging; for the purchase of a new home to cash out refinances to pay down debt to home improvement loans. So many people were trying to lock in that it somewhat "broke" the system.
This is one of the main reasons mortgage rates moved higher starting mid March.
To slow the rate of applications mortgage lenders will increase rates to encourage people to hold off their application.
This was another big reason why mortgage rates moved higher.
The daily up and down moves seen in the bond market were historic. In over 15 years in the mortgage industry I have never seen anything like what happened in March. It made the stock market collapse look minor.
Mortgage rates hate two things; inflation and market volatility.
The good news is that the volatility started to reduce as we moved into April and the first few days in April have been calm. Hopefully we can get at least three or four more weeks of calm which will help mortgage lenders be more aggressive with the rates they provide.
I am sure many people will be surprised to see this as one of the reasons why mortgage rates are higher but it's true. When the Fed came in and started buying Mortgage Backed Securities it caused a tremendous amount of disruption in the market. In fact it caused a lot of liquidity issues and mortgage lenders were scrambling to raise cash (still are).
What Should We Expect To See In April?
I know this is bad cliche but expect the unexpected.
Most mortgage industry professionals will tell you that the market is really hard to grasp right now and mortgage rates are high compared to where the bond market is (specifically the Mortgage Backed Securities market). Also lender credits (to cover closing costs) are almost non-existent which makes doing zero cost (or reduce cost) mortgages loans nearly impossible. Will that change? Of course it will but it's hard to say when that will happen.
In the last two weeks the economy has lost 10 million jobs. That's TEN MILLION. More jobs lost in two weeks then were lost in two years during the "Great Recession".
Here are some additional sites you can connect to; business.com, and hotfrog.com. Also, be sure to visit my website for the latest information on mortgages and mortgage rates. For over 15 year my team and I have been providing low rates, fast closings and exceptional service to clients throughout the state of California.