THE WASHINGTON POST.
SATURDAy, MARCH 7, 2020EZ
4er and may entice home buyers
out to shop as well. That’s certain-
ly the Fed’s hope. However, if buy-
ers are hesitant to go shopping
because they want to avoid con-
tact with others, this could damp-
en h ome sales.”
The Fed doesn’t set mortgage
rates, but its decisions influence
them. The decision to cut the fed-
eral funds rate unnerved investors
who fled to the safety o f long-term
government bonds. The bond
market rally caused the yield onthe 10-year Treasury to fall below
1 percent for the first time Tues-
day. The movement of long-term
bonds, particularly the 10-year
Treasury, tends to be one of the
best indicators of where m ortgage
rates are headed. But experts don’t
expect rates to fall as sharply as
bonds.
“In 2020, mortgage rates are
following the 10-year yield much
less closely than they tracked it
last year,” said Robert A. Brusca,
chief economist at Fact and Opin-
ion Economics in New York.
“Bankers seem reluctant to peg
mortgage rates in line with their
traditional relationship to the 10-
year n ote.”
Whitney Pipkin is a homeown-
er who is taking advantage of the
low rates. She and her husband
bought a single-family house in
Springfield in 2015 using a VA
loan. They r efinanced in 2016 into
a 3.25 percent mortgage. Pipkin
talked to several lenders this
week, three of which quoted her a
rate of 2.75 percent on a 30-year
fixed mortgage. The couple plans
to take the savings from refinanc-
ing and u se it to buy a minivan and
a new fence.
“A s guilty as I feel to t ake a dvan-
tage of something like the corona-
virus, they do want to stimulate
the economy,” Pipkin said. “Weplan to spend the money that we
make from this. We probably
would have [refinanced] anyway,
but this gives us m ore wiggle room
to get the n icer fence, h ire workers
instead of d oing it ourselves.”
Meanwhile, homeowners rush-
ing to take advantage of the low
rates drove the barrage of mort-
gage applications. According to
the latest data from the Mortgage
Bankers Association, the market
composite index — a measure of
total loan application volume —
increased 15.1 percent last week.
The refinance index jumped 26
percent, while the purchase index
fell 3 percent.
The refinance share of mort-
gage activity accounted for 66.2
percent of applications.
“The lowest mortgage rates in
more than seven years led to a 26
percent spike in refinances last
week, and the annual increase, at
224 percent, was even more im-
pressive,” said Bob Broeksmit,
MBA president and CEO. “Pur-
chase applications fell 3 percent
but remained 10 percent higher
than a year ago. Refinance activity
is likely to continue rising in the
coming weeks”
[email protected]More at washingtonpost.com/
realestateMortgage Rates
BY KATHY ORTONAs c oncerns intensified that the
coronavirus will have an outsize
effect on the global economy,
mortgage rates tumbled to their
lowest level in the history of Fred-
die Mac’s survey o f mortgage lend-
ers, w hich dates t o 1971.
According to the latest data re-
leased Thursday by the federally
chartered mortgage investor, the
30-year fixed-rate average sank to
a new low, falling to 3.29 percent
with an average 0.7 point. (Points
are fees paid to a lender equal to 1
percent of the loan amount and
are in addition to the interest
rate.) It was 3.45 percent a week
ago and 4 .41 percent a year ago.
The 30-year fixed rate, which
started the year at 3.72 percent,
has fallen 43 basis points in two
months. (A basis point is 0.01 per-
centage point.) Its previous low
was 3.31 percent in November- At the start of 2000, the
30-year fixed-rate average was at
8.15 percent.
The 15-year fixed-rate average
dropped to 2.79 percent with an
average 0.7 point. It was 2.95 per-
cent a week ago and 3 .83 percent a
year ago. The five-year adjustable
rate average slipped to 3.18 per-
cent with an average 0.2 point. It
was 3.2 percent a week ago and
3.87 p ercent a year ago.
“Mortgage r ates fell to new lows
this week, as fears of further, un-
checked spread o f the coronavirus
kept investors, and the Federal
Reserve, in search of safety and
stimulus,” said Matthew Speak-
man, a Zillow economist.
Mounting concerns about the
fallout from the coronavirus
prompted the Federal Reserve to
cut its benchmark r ate on Tuesday,
an emergency step it hadn’t taken
since t he 2008 financial crisis.
“The surprise rate cut, the larg-
est since December 2008, is a
strong move by the F ed to shore up
economic activity even though
most economic data has not yet
shown major slowing,” said Dan-
ielle Hale, c hief economist at R eal-
tor.com. “Lower [mortgage] rates
are likely to drive refinances h igh-Numbers plunge to record
lows on coronavirus fears
Source: Freddie MacWeekly averages for
popular mortgage types2.79THE WASHINGTON POST6%45321’18 ’19 ’203.2930-YEAR FIXED
15-YEAR FIXED
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