The Washington Post - 14.03.2020

THE WASHINGTON POST

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SATURDAy, MARCH 14, 2020

EZ

4

gage rate should have been

around 2.5 percent. But we’re not

in normal times.”

Adam DeSanctis, spokesman

for the MBA, said the lenders

have had to increase the 30-year

mortgage rate to reduce i nterest

in refinancing while they get con-

trol of the overwhelming de-

mand. In 2018, he said, the indus-

try cut back on staff amid a fall off

Mortgage Rates

BY MICHELE LERNER

Mortgage rates for the popular

30-year loan rose, according to

data released by Freddie Mac on

Thursday, reflecting lenders’

move to tamp down an avalanche

of applications from homeowners

seeking to refinance.

Investor uncertainty over the

novel coronavirus pandemic sent

mortgage rates plunging to their

lowest levels on record last week,

spurring heightened activity

among house hunters seeking

loans and especially homeowners

seeking to refinance.

Refinancing applications

soared 79 percent from the previ-

ous week, according to the Mort-

gage Bankers Association (MBA).

The flurry of interest prompted

the association to double its pre-

vious forecast of volume for refi-

nancing to $1.23 trillion for 2020.

House hunters also have

shown enthusiasm for the histori-

cally low rates. Virtual tours are

up and mortgage purchase origi-

nation applications rose 6 per-

cent from the previous week.

With the widening ramifica-

tions of covid-19 — t he Dow Jones

industrial average entering a bear

market and job losses in trans-

portation and tourism — housing

experts expected the mortgage

rate to drop even more this week.

Investors have fled the stock mar-

ket amid the crisis, parking their

money in the safety of the 10-year

Treasury note. Yields tend to fall

when more people invest in them.

The trajectory of mortgage rates

follow the rise and fall of the yield

of the 10-year Treasury note,

which was well below 1 percent.

Freddie Mac, which bases its

figures on a survey of lenders

across the country, reported t hat

the 30-year fixed-rate average

rose to 3.36 percent with an aver-

age of 0.7 point. (Points, repre-

senting 1 percent of the loan, are

fees buyers pay to lenders on top

of interest rates.) The 30-year

average hit its previous historic

low of 3.29 percent last week. It

was 4.31 percent a year ago.

“My reaction was disappoint-

ment and confusion,” said Law-

rence Yun, chief economist at the

National Association of Realtors.

“Under historical spread condi-

tions [given the rock-bottom

Treasury note yield], the mort-

in demand resulting from rising

mortgage rates and has yet to

recover. “Lenders are attempting

to cope with refinancing activity

that far exceeds their capacity.”

With the higher rates, home-

owners and buyers may want to

discuss a longer rate lock with

their lenders because of the rush

to refinance, said Michael Borod-

insky, vice president of Caliber

Home Loans in Edison, N.J.

Other rates followed analysts’

expectations. The 15-year fixed-

rate average fell to 2.77 percent

with an average 0.7 point. That

rate was 2.79 percent a week ago

and 3.76 percent a year ago. The

five-year adjustable rate average

dropped to 3.01 percent with an

average 0.2 point. It was 3.18

percent a week ago and 3.84

percent a year ago.

Real estate experts are watch-

ing consumer behavior carefully

to see if housing will continue to

be a bright spot in the economy or

whether house hunters will opt to

hold back in the crucial spring

home-buying season.

“The next few weeks will be

telling in regards to how much

some of the uncertainty in the

economy will affect the psyche of

prospective home buyers,” De-

Sanctis said.

“Seattle, where Redfin is head-

quartered, was the first city to see

cases and we’ve seen a little hesi-

tation in the housing market as

the virus has ramped up," said

Daryl Fairweather, chief econo-

mist at Redfin real estate broker-

age. "But it’s not all that negative

because some buyers think may-

be there will be a little less compe-

tition if some people wait to see

what happens with the virus.”

Lower mortgage rates have off-

set rising housing prices, theoret-

ically bringing homeownership

within reach of more people. Na-

tionally, the share of homes avail-

able in the $2,500 a month range

increased nearly 2 percentage

points in the first week of March

2020 compared with the same

period last year, according to Red-

fin.

“The typical principal and in-

terest payment is $100 lower now

compared with one year ago even

though prices are up 3.9 percent,”

said Danielle Hale, chief econo-

mist of Realtor.com.

[email protected]

Figures rise amid economic upheaval as coronavirus spreads

Source: Freddie Mac

Weekly averages for

popular mortgage types

2.77

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