The rollercoaster ride that is mortgages rates continued this week, as the 30-year fixed-rate mortgage (FRM) again dropped five basis points to 2.95%, down from last week when Freddie Mac reported rates hitting the 3% mark. A year ago at this time, the 30-year FRM averaged 3.15%.
Freddie Mac’s Primary Mortgage Market Survey (PMMS) also found the 15-year FRM at 2.27%, down from last week when it averaged 2.29%. A year ago at this time, the 15-year FRM averaged 2.62%.
“Mortgage rates are down below three percent, continuing to offer many homeowners the potential to refinance and increase their monthly cash flow,” said Sam Khater, Freddie Mac’s Chief Economist. “In fact, homeowners who refinanced their 30-year fixed-rate mortgage in 2020 saved more than $2,800 dollars annually. Substantial opportunity continues to exist today, as nearly $2 trillion in conforming mortgages have the ability to refinance and reduce their interest rate by at least half a percentage point.”
Yesterday, the Mortgage Bankers Association (MBA) reported that while overall mortgage application volume declined 4.2% week-over-week, refis still comprise a healthy share of overall mortgage volume, with a 61.4% share of total application volume. With rates hovering in the 3% range, more are seeking refi opportunities and are making the most of a record-low rate environment.
And while rates remain low, demand is still at an all-time high, with the short supply of homes on the market selling for a premium across the board. Earlier this week, the latest S&P CoreLogic Case-Shiller U.S. National Home Price NSA Index from S&P Dow Jones Indices, which covers all nine U.S. census divisions, found that for March 2021, home prices continued to increase across the U.S., with a 13.2% annual gain in March, up from 12.0% in February.
“With double-digit price jumps for the past 10 months, low mortgage rates have been fueling a strong seller’s market,” said Realtor.com Senior Economist George Ratiu. “Buyers who purchased a home in the past year and locked in record-low rates will benefit from predictable monthly payments as a hedge against inflation concerns.”
Signs of an improving economy was supported by today’s findings from the U.S. Department of Labor, which found that for the week ending May 22, initial unemployment claims dropped to 406,000, a decrease of 38,000 from the previous week's unrevised level of 444,000, the lowest level for initial claims since March 14, 2020 when unemployment claims were at 256,000 nationwide.
With more returning to the workforce and the deadline for the foreclosure moratoria quickly approaching, more homeowners will be better positioned to exit their forbearance plans on steady financial ground. Servicers are prepping for an influx of volume to work with homeowners in exiting their plans.
With approximately 2.1 million homeowners currently in forbearance plans, the share of loans in forbearance is down for the 12th consecutive week, as the MBA’s Forbearance and Call Volume Survey found the total number of loans now in forbearance decreased by three basis points from 4.22% of servicers’ portfolio volume in the prior week to 4.19%.