05/01/2020
Mortgage rates plummet to an all-time low
By R.A. Schuetz STAFF WRITER
Paul Sakuma / Associated Press
The average rate for a 30-year fixed-rate mortgage fell to 3.23 percent, but economic turmoil has meant fewer buyers.
Mortgage rates fell to an all-time low, government-sponsored mortgage-finance company Freddie Mac said Thursday morning. However, not everyone can take advantage.
The average rate for a 30-year fixed-rate mortgage last week fell to 3.23 percent, nearly a full point lower than the same period a year before. A potential homebuyer taking out a $200,000 loan at these rates would save over $100 a month compared to the same loan at average rates a year ago.
But the same economic turmoil that has driven rates down to historic lows have also prevented many current homeowners and prospective homebuyers from benefiting.
In the last six weeks, more than 30 million Americans have filed for unemployment, shutting them out of the market. The dynamic has also made loan officers wary of originating new loans: If a new borrower loses their job or sees wages fall and has to ask for a pause or reduction in monthly payments — which servicers are required to provide for federally-backed mortgages — the loan could incur short-term losses. At scale, those losses could imperil the way the mortgage-finance system works.
Already, 7 percent of mortgages are in forbearance, according to a survey conducted by the Mortgage Bankers Association. As a result, many lenders have increased their requirements for credit scores, downpayment sizes and fees to minimize losses.
“While many people are benefiting from low mortgage rates, it’s important to remember that not all people are able to take advantage of them given the current pandemic,” wrote Freddie Mac in its report. [email protected];
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