May 13, 2020
Mortgage rates improved today, on average, but things can vary quite a bit depending on the lender. Several lenders are back in line with their lowest rates of the past 2 weeks. With the exception of early March 2020, these are the lowest rates of all time--at least if we're talking about conventional, conforming, top tier scenarios.
It continues to be the case that "off-the-beaten-path" loan scenarios are nowhere near their historical lows. This group includes risk factors like cash-out refinances, lower FICO scores, investment properties, and higher loan-to-value ratios. Combine more than a few of those factors and you can be reasonably assured that you won't even get a quote from a lender willing to do the loan, let alone offer a decent rate. This is being driven by the response to coronavirus in the housing market and beyond, where rampant forbearances create rampant uncertainty for mortgage investors. Loan scenarios with more risk factors are essentially in much lower (if any) demand until there is more clarity on the employment and forbearance situations.
Meanwhile, back in the realm of the nearly perfect loan scenario, mortgage lenders have been more and more free to operate like they used to with respect to adjusting rate offerings based on movement in the bond market. Bonds were steady to slightly stronger today as Fed Chair Powell offered a downbeat assessment of the economy (bad for stocks, good for bonds).
Loan Originator Perspective
With rates not far off from all time lows, my clients and I continue to favor locking as soon as possible. Don't really see any benefit of taking the risk now to float. -Victor Burek, Churchill Mortgage
Ongoing Reminder on Forbearance
Coronavirus has created unprecedented challenges for people and industries. For homeowners facing a big reduction in income due to coronavirus-related hardship, a forbearance can make excellent sense. But for those who have the capacity to continue making mortgage payments, there are downsides to consider. Forbearance itself does not hurt your credit score, but it does show up on your credit report. This will affect your ability to qualify for a loan in the present and near future. It can also result in your other creditors decreasing your available credit balances. This has the unintended effect of increasing your ratio of debt to available credit which is a key component of credit scoring models. Thus, even though forbearance itself is not hurting your credit, it can indirectly lower your credit score and it will absolutely impact your mortgage creditworthiness in the short term.