Mortgage Interest rates hit new record lows for the week of 8/8/20

Mortgage interest rates for buying a home on the Palos Verdes Peninsula declined to new record lows this week for conforming loans but remain higher to jumbo loans . The following are excerpts from the newsletter on interest rates published by HSH Associates :

“Mortgage rates moved to new record lows again this week, but low and even falling rates don’t seem to be attracting as much attention as you would think they would. In the week ending July 31, applications for mortgage credit declined by 5.1%, noted the Mortgage Bankers Association. Requests for funds to buy homes slipped by 1.8% , a third decline in the last four week, while those for refinancing existing mortgages dropped by 6.8% after a 0.4% fall the week prior. It’s peak vacation season, and odds favor that apps will pick up again, but it’s also likely that the spring-pushed-to-summer homebuying season may be starting to show signs of normal seasonal waning. Of course, tight inventories of homes to buy and somewhat stiffer mortgage underwriting conditions are probably playing a role in that as well.

Mortgage credit is a little tighter at the moment than it was, according to the Federal Reserve survey of Senior Loan Officers and lending practices. Although banks are not the dominant players in the mortgage market at the moment, their stances on lending are likely reflective of the industry as a whole, if to varying degrees. Majorities of the 70 banks the Fed includes in its quarterly poll reported “somewhat” or “considerably” tighter underwriting conditions across all classes of mortgage.The greatest amount of tightening could be seen in jumbo mortgage classes, where qualified mortgages-eligible  (QM”) jumbos saw 58.9% of banks increasing requirements, and non-QM jumbos posted a whopping 70.2% of respondents making it more difficult to get one of these loans.

Risks of making, servicing and investing in mortgages remains elevated. Yesterday’s risks may be diminishing, but with a troubled economy all around and an uncertain level of future fiscal support coming, more difficulty in the mortgage space seems likely as we move forward in time.

After weeks where underlying interest rates should have caused mortgage rates to fall, they finally succumbed to that pressure this week and fell meaningfully. It may be this way — a plateau for a bit before a drop to the next level — and at the moment, it looks like next week will be a pretty flat spot, probably one of a few before the next leg down. We think there will be a couple of basis point decline in the average offered rate for a conforming 30-year FRM as reported by Freddie Mac next Thursday.”

The following are interest rate quotes from Allen Bond of Wells Fargo:

Conforming

t

Jumbo

Rates shown are for purchase loans only. This information is accurate as of 8/6/2020 10:20:40 AM (CT) and is subject to change without notice.