The average mortgage rate for a 30-year fixed loan rose from its previous record low by 14 basis points this week to 2.79%, according to Freddie Mac’s Primary Mortgage Market Survey. This marks the first time mortgage rates have risen in almost two months.
The 15-year fixed rate also rose slightly this week from 2.16% to 2.23%.
Even with this week’s uptick, there have still been 23 consecutive weeks when average mortgage rates have been below 3%.
According to Sam Khater, Freddie Mac’s chief economist, rising treasury yields have been putting pressure on rates to finally move up again.
“While mortgage rates are expected to increase modestly in 2021, they will remain inarguably low, supporting homebuyer demand and leading to continued refinance activity,” Khater said. “Borrowers are smart to take advantage of these low rates now and will certainly benefit as a result.”
And take advantage they have.
With no end in sight to record low mortgage rates and the increased loan volume, lenders must streamline workflows and accelerate time to close. Evolving from traditional closings to hybrid closings to full eClosings can help lenders process more loans at a faster pace without overwhelming their resources.
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Mortgage applications jumped 16.7% last week according to the Mortgage Bankers Association, and refi’s hit a massive 93% year-over-year mark as government loans experienced their strongest week in nearly eight years.
The jump underlines the seasonality behind the decrease in mortgage rates the week prior, coupled with expectations of additional fiscal stimulus from the incoming administration, according to MBA Associate Vice President of Economic and Industry Forecasting Joel Kan.
While purchase borrowers have been scrambling for months now to battle it out for the lowest possible rate on the limited inventory available, the Federal Reserve may have given borrowers until the end of 2021 to snap one up.
In a speech on Friday, Fed. Vice Chairman Richard Clarida said he expects the central bank to maintain the pace of its bond purchases through 2021. Those purchases are what prevented a credit crunch and made borrowing cheaper back in March.
Now, at an average of $120 billion a month — split between $80 billion in Treasuries and $40 billion in MBS — Fed holdings have surpassed $7 trillion, and Clarida doesn’t see a pullback anytime this year.