In the past, when the economy tanks, typically mortgage rates plummet. But amid the Coronavirus epidemic, mortgage rates are more volatile than ever. Depending on the hour, it’s hard to know what the current rate is and if it is a good time to purchase a house or if homeowners should refinance.
The Federal Reserve cut their interest rates to near zero, with the hope of helping stimulate the economy. However, mortgage rates are not directly correlated with the Fed’s directives; it has more of a trickle-down effect.
But refinance applications have been surging, causing banks to even temporarily inflate mortgage rates to be able to sift through the backlog of applications. Mortgage brokers working from home due to the Coronavirus compounds the delay.
On March 19, the mortgage rate varied wildly. Matthew Graham of Mortgage News Daily wrote, “To oversimplify, the cost of any given mortgage changed massively, five times today. In more normal times, this would mean that your available rate went up or down massively, five times today. The reality is that most lenders began the day quoting significantly higher rates than we’ve seen recently, and the average change only made that rate much higher.
Mortgage Rate Volatility: Helpful Advice from the Pros
Things are changing at a rapid pace. So reports from even yesterday sometimes are no longer relevant today.
“Bottom line: rates are as high as they’ve been in nearly a year,” Graham wrote. “If you’re seeing a news article that references Freddie Mac’s weekly survey, it’s based on data that stopped being relevant on Tuesday. A lot has changed since then.”
So don’t fret if it seems information is continuously changing, everyone is dealing with this volatile market right now. But The Fed’s actions are helping put lenders at ease and set mortgage rates accordingly.
“It was so disruptive to the point that last week, lenders were really having trouble determining how to price loans when they weren’t getting a clear signal from the capital markets as to what those rates should be,” Mike Fratantoni, chief economist at the Mortgage Bankers Association told MarketWatch. “The Fed stepping in this week had a “huge psychological benefit” for lenders, which allowed them to feel comfortable bringing rates lower.”
The best course of action for homeowners can be talking it through with a professional mortgage broker to understand if refinancing or purchasing a home works for you in your current situation and in the current market.
“My best advice, if you are purchasing or refinancing a home, is to contact your loan originator, find out what is needed to lock and when you have those items, and the rate makes sense, lock-in and work to close that loan in a timely fashion,” Michael Becker a branch manager at Sierra Pacific Mortgage, from White Marsh, Maryland wrote on Bankrate.com.
Should I Buy A Home Right Now?
Buying a home right now is an extremely personal decision based on you and your family’s current economic and health situation. Unfortunately, many workers are being laid off or furloughed due to the Coronavirus’ impact on the economy.
“Until lenders can sift through all the volume and uncertainty, I would expect rates to continue to drift higher. My advice to anyone right now would be if it isn’t an emergency to get a mortgage, then wait for things to settle down,” wrote Gordon Miller, President of Miller Lending from Cary, North Carolina, wrote on Bankrate.com.
However, if you are luckily in a stable job, this time has the potential to be an excellent opportunity to buy a home. Housing prices also remain generally affordable, as they have not increased to their peak prices from 2006. So if you have the money for a down payment, it’s a good time to get a relatively low-interest rate on your mortgage.
“Remember that a good, normal, 30-year fixed-rate is 5 percent,” Guy Cecala, published of Inside Mortgage Finance, told Kiplinger. “But nobody wants to hear that when they’ve seen 3.5 percent.”
Typically, spring is the best season to sell and purchase a home. Before the Coronavirus exploded across the United States, some early home sellers listed their houses for sale, prepping for the spring surge. While the current inventory may be limited, so is the competition. Many are delaying their home buying search.
If you do want to view a potential new home, contact the broker, as open houses are delayed in most states. When meeting the broker, don’t shake hands – you may even consider wearing gloves. While going through the home, it’s best to not touch any services either. Wash your hands before and after leaving the house.
To help navigate the prospects through this volatility, REX Home Loans can help get you a competitive and low mortgage rate that can save you thousands of dollars because our brokers don’t work on commissions.
Some buyers can lock in lower 30-year mortgage rates by acting now. REX Home Loans can help you get pre-approved for a mortgage, then use REX to find the right home for you. Finally, REX Home Loans will secure your mortgage and work to expedite your closing process.
Is It Time To Refinance?
Some homeowners who refinance can save themselves thousands of dollars on their mortgage by refinancing and locking in a lower rate.
However, these rates are fluctuating. If you wait too long, the rates may change again, and there is no guarantee that the rates will continue to go down.
The Fed pledged to buy a large amount of government-backed debt in hopes of stabilizing the housing market and Treasury bonds. The Fed’s actions should help homeowners.
The other challenge of refinancing right now is that most of the country is under a stay-at-home order, and banks have closed their lobbies. Social distancing makes meeting with mortgage broker challenging.
REX Home Loans has always been operating online and can help you evaluate your current mortgage and how much refinancing can save you. Either fill out a few simple questions or give us a call to find out what your competitive mortgage rate could be.