Will Mortgage Rates Remain Low?

Could lenders be facing a capacity issue that is preventing rates from going lower? Mortgage brokers reported a slew of customers flocking to refinance their loans after rates sank to record lows. Some lenders said they actually ended up having to charge higher rates just to slow demand.

The Fed announced in an emergency meeting on Sunday that it would buy at least $500 billion in U.S. Treasury bonds and $200 billion in government mortgage-backed securities over the coming months. Economists predict this will help support the surge in refinancings and stabilize mortgage-backed securities, which could help mortgage rates then move lower.

“That would stabilize rates and bring them back down lower,” says Danielle Hale, realtor.com®’s chief economist. “They’ll [likely] go back to the low 3% [range]. Might we see rates below 3%? I wouldn’t rule it out.”

Source: “As the Coronavirus Spreads, a Question: ‘Will Mortgage Rates Stay Low?’” The New York Times (March 17, 2020) and “The Fed Slashed Interest Rates. Here’s Why Mortgage Rates Likely Won’t Follow Suit,” realtor.com® (March 16, 2020)