By Angela Gonzales | Phoenix Business Journal
A few weeks ago, mortgage rates were at an all-time low, giving homebuyers a bit of silver lining during this COVID-19 pandemic.
But a stampede of homeowners trying to refinance their existing homes overwhelmed mortgage lenders, who didn’t have the personnel to keep up with the applications, said Jeff Tucker, a Zillow Group Inc. economist.
“The mortgage market has been crazy for the last few weeks,” Tucker said. “There was a really big wave of demand running up against a fairly limited number of bankers available to fill out those refinance applications.”
At the same time, there’s been a slowdown over the past couple of weeks in the purchases in the secondary market for mortgage-backed securities, he said.
“In that case, that was a lot of investors and financial institutions getting worried about the fallout from the coronavirus pandemic,” he said.
The Federal Reserve recognized that and bought mortgage-backed securities, something it hasn’t done in several years, Tucker said.
“The Fed stepped up quickly,” he said. “It was a very smart move to reassure markets that it’s still a safe asset. Now that means mortgage lenders feel more confident they will be able to sell off their loans, that there will be buyers in the secondary market for it.”
While 30-year conventional mortgage rates are inching up to around 3.65%, they’re still quite low, Tucker said.
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Related story: Mortgage rates head back down as Federal Reserve becomes major buyer of mortgage-backed securities – The Washington Post (Mar. 26, 2020)