Mortgage rates continue showing a willingness to play by at least a few of the same rules that typically apply. Most of the rules went out the window as the market reacted to coronavirus–specifically the unprecedented joblessness hitting all at once and, with it, an unprecedented surge in mortgage payment forbearances. Forbearances mean that mortgage investors face significant uncertainty when it comes to how and when they’ll be repaid. That’s had various effects on mortgage pricing and availability, many of them huge and abrupt.
While the initial shock associated with the forbearance situation has died down a bit, rates remain elevated relative to where they’d normally be based on reliable benchmarks. That’s not likely to change soon or quickly, but at least rate movement has done more to reconnect with the movement in those benchmarks. For instance, even though gap between mortgage rates and mortgage bond yields is wider than it’s ever been, they’re finally moving in the same direction again. For a time, mortgage rates didn’t seem to care about mortgage bonds.
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Source: mortgagenewsdaily.comNew feed