20 Mar Rates Continue to Lose the Battle
Mortgage interest rates continue to get pounded again this morning, extending one of the most brutal times I remember in my career. In yesterday’s update I outlined several key reasons why this is happening. At this point, it’s hard to see an end in sight. As long as mortgage bond prices continue on their downward trend, we can expect rates to move higher. Let’s hope that markets can soon stabilize and find a point of equilibrium where rates can maintain in a tight and reasonable range. The recent volatility has been so strong that rates that are available one minute are gone the next. This has created a tremendous challenge for mortgage companies and consumers alike.
As the country takes additional steps to protect against the spread of the Coronavirus, tens of thousands of people are expected to be laid off each day. There are speculations that the number of new unemployment claims could top a million in the days to come. Since our system has been averaging fewer than 220,000 claims per week, it is clear that there will be capacity challenges on new claims needing to be processed. The concern of massive layoffs is just one key fear that is driving mortgage interest rates higher. Although most feel the housing market will continue to thrive in the next recession, it should be clear that many will not be able to make their house payments, which will drag home values lower.
As mortgage bonds continue to get hammered, we will maintain a locking bias.