Fed Drives Rates On Home Loans To Record Lows
May 20, 2020
The economy has taken a number of serious blows due to the COVID-19 pandemic, and with its recovery still very much turbulent, Federal Reserve Chairman Jerome Powell warns that without added government aid, there could be "lasting damage," as the coronavirus has forced the Fed to drive mortgage rates to new lows, according a MoneyWise report via Yahoo Finance.
The report stated that a Mortgage News Daily survey showed 30-year fixed-rate mortgages drop to an average of 3.09%, which is a new survey low for the publication. Previously, it was reported that mortgage rates are set by lenders for the most part and many of them aren't inclined to offer rates below the 3% mark. Though, the current trend sees 30-year rates dipping below the 3.3% mark, according to a recent forecast from Freddie Mac.
"Even so, the site's economists say homebuyers will often find getting a loan now requires a larger down payment and a higher credit score 'as lenders seek to mitigate their own risks against economic uncertainty,'" added Zillow economist Matthew Speakman, according to the report. Lenders continue to raise lending standards, making it more difficult for potential borrowers to secure a loan.
In addition, the Yahoo Finance report revealed that some folks looking to refinance their homes aren't being offered the low rates they thought they would receive. However, measures taken yesterday by the Federal Housing Finance Agency will allow Fannie Mae and Freddie Mac borrowers in forbearance to apply for refinancing and new purchase mortgages once their loans are current, a measure that waives a previous mandatory wait of 12 months, and thus granting quicker access to record-low rates.
Click here to read more about the future of mortgage rates.
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