As Mortgage rates yo-yo, what is means for San Diego real estate

Even with the coronavirus taking a wrench to the economy, many San Diego housing analysts have said low mortgage rates and demand will continue to drive the housing market.

But, what happens when mortgage rates go up?

In the past few weeks, rates for a 30-year, fixed-rate mortgage have fluctuated wildly — making monthly payments on an expensive San Diego County home go up or down by hundreds of dollars.

The rate was 3.37 percent Monday morning, said Mortgage News Daily, but was up to 4.15 percent two weeks ago.

For now, it appears unlikely that millions of sheltered Americans are going to be shopping much for homes. Also, many have lost jobs. Still, for those trying to purchase, navigating interest rates will take some work.

Tucker also said lenders don’t have as much incentive to try and fight for customers with lower rates when customers are calling them nonstop.

Mortgage rates usually follow the yields on mortgage-backed securities. These bonds typically track the yield on the U.S. 10-year Treasury.

Tucker said if the 10-year Treasury yield remains under 1 percent, the secondary market for mortgages stays healthy and the backlog of applications gets processed, it is possible mortgage rates will drop again to historic lows.

read more at: https://www.sandiegouniontribune.com/business/real-estate/story/2020-03-31/mortgage-rates-are-all-over-the-place-what-it-means-for-san-diego-real-estate

First signs of housing disruption appear

Economists have been waiting for the first signs of virus-related disruptions in housing with the expectation that they will be seismic. Federal housing data looks further back for trends, meaning there is a lag in real world activity. But details have begun to emerge in private surveys.

On Wednesday, the Mortgage Bankers Association reported that mortgage applications plunged 29.4% last week. People trying to sell homes have cancelled showings during the outbreak and because closings are done in person, economists expect sales will decline sharply. But the virus has affected the market in other, unforeseen ways as well.

Despite additional cuts to benchmark interest rates by the U.S. Federal Reserve, mortgage rates have actually been rising.

Joel Kan, MBA’s Associate Vice President of Economic and Industry Forecasting, said that’s partially because lenders amid the outbreak are wrestling with capacity issues, backlogs in the pipeline, and the challenge of working remotely in real estate.

“Home purchase applications were notably impacted by rising rates and the widespread economic disruption and uncertainty over household employment and incomes,” Kan wrote. “Last week’s purchase index fell 15% to its lowest level since August 2019.”

While mortgage applications fall, refinancing, which can be done from home, is soaring. Lending Tree says the economic effects of the virus outbreak have led to unprecedented volatility in mortgage interest rates and an overwhelming surge of borrower demand. The company’s data shows that refinance mortgage applications through its marketplace tripled from a year ago in each of the 50 largest cities and in all but five states. In San Francisco, refinance loan requests skyrocketed 417%.

https://apnews.com/8358aee751e399735a646e9f14f66be7

Home sales drop in February

US new home sales fell 4.4% in Feb with bigger declines expected in coming months as the Covid-19 puts a major crimp on home sales.