Best Month Ever For Mortgage Rates
Mortgage rates managed another slight improvement today, which means the average lender is offering new all-time low rates for the 4th time this month. Even if rates had lurched unexpectedly higher today, June still would have gone down as the best month in the history of the mortgage market with many lenders now offering conventional 30yr fixed rates under 3% on top tier scenarios.
The low rate environment has been made possible first and foremost by the economic contraction resulting from coronavirus. In and of itself, however, that still likely wouldn't be sufficient to get rates as low as they are. The rest of the heavy lifting has been done by the Federal Reserve, which stepped in when markets were experiencing the height of their recent volatility in early March 2020. The Fed helped restore liquidity by buying Treasuries and mortgage-backed bonds directly. This helps push interest rates down not only for mortgages, but also for the US government (which needs to borrower more heavily than ever before in order to finance the fiscal response to coronavirus).
Either way, we're talking about the pandemic. As long as it's an issue--especially one that is staying the same or getting worse--there will be a reason for rates to be historically low. There is a lot of uncertainty in the market right now as several states see rapidly rising positive test rates and case counts. If that proves to be a temporary reaction to increased social interaction (and one that is ultimately manageable), rates will start seeing some pressure to move higher, but we have yet to turn that corner.