Mortgage rates fall for the first time since February, but they don’t necessarily wait for a long breather

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After seven weeks of consecutive increases, benchmark mortgage rates have fallen. And that will give homeowners and buyers the opportunity to lock in lower rates, but the opportunity is not guaranteed to last long. The 30-year fixed rate mortgage averaged 3.13% for the week ended April 8, five basis points less than the previous week, Freddie Mac FMCC reported Thursday + 0.92%. Previously, the 30-year loan rate had reached its highest level since June of last year.

The 15-year fixed rate mortgage, meanwhile, fell three basis points to an average of 2.42%. The 5-year Treasury-indexed adjustable rate mortgage averaged 2.92%, eight basis points more than the previous week. The drop in mortgage rates over the past week was driven by the modest drop in US Treasury yields, according to Sam Khater, chief economist at Freddie Mac. Mortgage rates generally follow roughly the direction of yields. of long-term bonds, including the 10-year Treasury TMUBMUSD10Y, 1,643%, but that ratio has ebbed and flowed over the course of the pandemic. “The drop in rates creates another opportunity for those who have not refinanced to take a look at the possibility,” Khater said in the report. But whatever the advantage Americans get from rising mortgage rates, it is still unclear whether it will be short-lived or not. Zillow Z, + 2.74% ZG, + 2.03% Economist Matthew Speakman projects that the reprieve could be long-lasting in light of how mortgage rates have responded to recent economic data. March’s employment figures far exceeded expectations and the leading index tracking the health of the services sector hit an all-time high. But mortgage rates fell despite these positive signs for the broader economy. “While the market had probably already priced in some of these strong reports, the modest move continued to be an encouraging sign for rates that have tried, and failed, to find a ceiling in recent weeks,” Speakman said. Instead, mortgage rates may be responding to signals related to the pandemic, he argued. “With coronavirus cases beginning to rise again in most US states and many countries around the world, investors have a renewed reason for caution, which tends to drive down bond yields. and mortgage rates, ”Speakman said. However, Speakman and other housing economists agree that the long-term trajectory of mortgage rates appears to be upward. And that will create pressure for the housing market.

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“‘With coronavirus cases starting to rise again in most US states and many countries around the world, investors have a new reason to be cautious.’ ”- Matthew Speakman, Zillow Economist

Homeowners, who might otherwise be willing to sell their homes right now, but may also have recently refinanced when rates bottomed out, could be hard-pressed to list their homes anytime soon. The lack of inventory in the housing market would make it difficult for a seller to find a new place to live, and the higher mortgage rates prevailing today essentially drive up the price of any home they would buy. “Sellers are caught in a trap, they want to list their home but can’t find a suitable replacement home, further contributing to the void of homes for sale,” said George Ratiu, senior economist at Realtor.com. “For buyers, higher rates mean higher monthly payments and they are forced to search for less expensive homes.” Consequently, the spring season for home buying could be slow this year for the real estate industry due to supply-side constraints.