Mortgage rates forecast

The actions taken by the Federal Reserve to calm the financial markets was key to the drop in mortgage rates this week, according to Freddie Mac.

The $16 trillion U.S. mortgage market — epicenter of the last global financial crisis — is suddenly experiencing its worst turmoil in more than a decade, setting off alarms across the financial industry and prompting the Federal Reserve to intervene.

Mortgage rates rose sharply this week as originators looked to manage the overwhelming demand from consumers, according to Freddie Mac.

Impac Mortgage Holdings decided a year ago to emphasize its non-qualified mortgage lending operations and placed the company in position to succeed when the housing market returns to normal.

Increased refinancing volume led Fannie Mae to raise its 2020 estimate by $300 billion and 2021 projection by $280 billion.

Companies in the mortgage business were already focused on processing a lot of loans and generating efficiencies before the latest uptick in business hit.

Paradoxically, mortgage rates actually increased this past week, even as the 10-year Treasury yield plumbed new depths, likely because lenders are too busy to handle the influx of applications.

Mortgage lenders could benefit from the surge in refinancing due to widening market spreads, and that could help offset damage to servicing rights portfolio valuations, according to Keefe, Bruyette & Woods.

The 10-year Treasury yield fell below 0.5% and the 30-year yield dropped under 0.9%, taking the whole U.S. yield curve below 1% for the first time in history.

It's hard to overstate just how wild bond markets have gotten amid the coronavirus scare, forcing traders to rethink what's possible.

Capacity constraints among mortgage lenders are leading to wider spreads between mortgages and the 10-year Treasury yield even after it remained below 1% for an extended period this week.

Mortgage rates hit their lowest point since Freddie Mac began tracking this data in 1971, as the 10-year Treasury yield fell below 1% after the Federal Open Market Committee's surprise short-term rate cut.

A drop in interest rates in response to the coronavirus outbreak is adding urgency to a hiring spree across the mortgage industry.

Investors' purchases of 10-year Treasurys after the Fed's 50 basis point short-term rate cut drove the yield below 1% for a period of time.

Fears stemming from the coronavirus have resulted in lower mortgage rates and more business for now, but if the situation deteriorates further, consumers could decide to put off buying a home.

Mortgage rates slipped this week, as the stock market sell-off resulted in investors moving into bonds which drove the 10-year Treasury yield down, according to Freddie Mac.

A rally in Treasuries that's driven 10-year yields toward record lows could have more room to run, a Goldman Sachs report said.

Investors snapped up U.S. Treasuries, sending the yield on 10-year securities plunging by as much as 11 basis points Monday to within 5 basis points of its all-time low.

Even with the small increase in mortgage rates this past week, the home purchase market stayed active and should remain so for the peak buying season.

For the first time since the start of the housing crisis, mortgage origination volume could top $2 trillion for three consecutive years, according to Fannie Mae.