Mortgage rates are right in line with all-time lows, but no conversation about all-time low rates would be complete without mentioning these recently relevant topics:
1. Different borrowers will see different pricing. Though this has always been the case, it’s much more pronounced post-coronavirus. Specifically, we’re talking about the big differences in mortgage rate quotes for borrowers with certain combinations of risk factors. These include factors like investment properties, cash-out, higher loan-to-value ratios, lower credit, etc. The all-time low rates seen in 2012 (and almost again in 2016) on these types of loan scenarios were much lower than what we are seeing today.
2. It’s all about COVID. The market is hanging on every major update on covid-19 case counts (specifically positive test rates and hospitalizations) and specific state/county quarantine measures. If it looks like the economy can slowly lurch back to business, rates may feel pressure to move a bit higher. If it looks like coronavirus retains the upper hand, rates could continue at all-time lows.
3. The big gap. There’s been a very wide gap between mortgage rates and what the bond market says mortgage rates should be doing. This gap is much wider than any pre-coronavirus time period. Over the past two months, mortgage rates have fallen even as Treasury yields were flat/slightly higher. That gap has largely been closing so we’re back to a more level playing field. In short, if bond yields move higher, mortgage rates are more prone to follow moving forward.