Flood of Mortgage Filings Swamp Lenders
A surge in home financing volumes is pushing up mortgage rates.
So many homeowners and buyers are trying to take advantage of historically low mortgage costs that the industry has become swamped. That’s caused some mortgage firms to bump up their borrowing costs to try and better control the financing flows.
“As refinance applications continue to surge and lenders work to manage capacity, the 30-year fixed-rate mortgage ticked up from last week’s all-time low,” Sam Khater, Freddie Mac’s chief economist, said in the mortgage company’s weekly report. “Mortgage rates remain at extraordinary levels, and many homeowners are smartly weighing their options to refinance, potentially saving themselves money.”
This week, nationwide long-term mortgage rates averaged 3.36%, up from last week’s record low 3.29%. A year ago, 30-year fixed rate mortgage averaged 4.31% nationwide.
Last week, U.S. mortgage applications soared 55.4%. Home refinancing applications were up almost 80% to their highest level in a decade, according to the Mortgage Bankers Association.
“Taking into the account the current economic situation and how much rates have fallen, Mortgage Bankers Association is nearly doubling its 2020 refinance originations forecast to $1.2 trillion, a 37 percent increase from 2019 and the strongest refinance volume since 2012,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement. Given the overall interest rate environment, mortgage rates should be even lower than they are currently, many analysts say.
“Somehow, some way, mortgage rates actually moved higher this week, touching their highest level in almost a month despite immense volatility in the markets and Treasury yields falling and remaining near all-time lows,” Zillow economist Matthew Speakman said. “After bouncing along near record lows for a few days, mortgage interest rates shot up over the last two days. “So what’s the deal?” he said. “Some are speculating that lenders may be artificially buoying advertised rates in order to stem this rising tide of refinancing activity and simply keep up with demand...
