Last week, as the coronavirus spread and the stock market dropped, long-term mortgage rates fell to their lowest level on record.
Enormous demand from prospective homebuyers and homeowners looking to refinance inundated mortgage broker offices with applications.
A couple of days ago, the market responded.
"From all-time lows over the weekend, rates have moved up to the highest levels in quite some time, a direct result of capacity," Steve Abelman, Senior Advisor at Truist (formerly BB&T) explains. "An unexpected rise in applications fills the funnel quickly, in this case within a few days." Abelman noted that offices staffed to accept 200 applications a day received 300+ per day and don’t have the staff to keep up.
Another lender that UrbanTurf spoke with shortly after the historic rates were announced last Thursday noted that their office put a 30-minute window in place before rates would be raised internally in order to slow demand.
In short, lenders do not have the capacity to process this demand despite efforts to hire and train new personnel. Higher mortgage rates, then, are intended to relieve some of that pressure on the system.
Today, mortgage rates announced by Freddie Mac inched up from all-time lows, which likely means that rates offered by lenders will go up as well. UrbanTurf will continue to monitor rates on a weekly basis.
This article originally published at https://dc.urbanturf.com/articles/blog/mortgage-rates-spike-to-slow-high-demand/16583.
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