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#macsecurity | #operatingsystem | Freddie Mac predicts mortgage rates will drop even further – | #cybersecurity | #informationsecurity


Mortgage rates remain near historic lows. But government-sponsored mortgage finance company Freddie Mac predicts they will drop even further.

“While mortgage rates remained flat over the last week, there is room for rates to move down,” wrote Freddie Mac in its weekly survey of mortgage rates.

The average rate for a 30-year fixed-rate mortgage was 3.33 percent, and the average for a 15-year fixed-rate mortgage, commonly used for refinances, was 2.77 percent. Both are down roughly 80 basis points from the year before.

That’s in large part because of the drop in stock markets, a product of the uncertainty over the length and severity of the novel coronavirus’s impact on the economy.

Nervous investors are seeking safer investments and pouring money into government bonds and mortgage debt — much of it backed by Freddie Mac and its sister government-sponsored mortgage company Fannie Mae. Investors are so hungry for security that they are willing accept lower yields, driving the interest paid on bonds and mortgages.

Because bond and mortgage rates respond to similar stimuli, the yield on 10-year U.S. Treasury bonds and mortgage rates tend to move in lockstep. But, as Freddie Mac noted, while the yields for a 10-year Treasury bond have dropped more than a full percentage point this year, mortgage rates have only declined by one-third of a point.

RATES: Mortgage rates should plunge along with stocks. So why have they drifted up?

“As financial markets continue to heal, we expect mortgage rates will drift lower in the second half of 2020,” said Freddie Mac.

One of the reasons mortgage rates have not moved lower as dramatically as bonds is because so many people rushed to take advantage of low rates that lenders could not handle the high volume of applications; rates drifted upward as a way of slowing the flow. That could soon change.

The number of mortgage applications dropped 18 percent last week from the week before, according to the Mortgage Bankers Association. And in a worrying sign for home sales, purchase applications were 33 percent down from what they were a year ago.

But in the midst of an economic crisis, even the lowest rates on record won’t benefit many. Those who have lost jobs will not be able to close on a loan — and more than 16 million Americans have applied for unemployment within three weeks.

What’s more, mortgages are becoming harder to get for those with less-than-stellar credit as investors run from risk. The combination of staggering job losses and emergency orders blocking foreclosures during the crisis has led investors to insist on much higher credit scores for mortgages originated through first-time homebuying programs via the Federal Housing Administration and Veterans Affairs.

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