Mortgage rates resisted the temptation to hike after hitting their highest level in months a week ago. But research suggests that many households will not be able to take advantage of the potential savings that the low-rate environment represents.
The 15-year fixed-rate mortgage rose one basis point to an average of 2.16%. The five-year adjustable-rate hybrid mortgage, indexed by the Treasury, averaged 2.43%, down one basis point from the previous week.
“Mortgage rates were flat this week as investors held firm, waiting for more signals to dictate the way forward for the economy and possible key decisions made by the Federal Reserve.”
“Mortgage rates were flat this week as investors held firm, waiting for more signals to dictate the way forward for the economy and possible key decisions made by the Federal Reserve,” Zillow said.
senior economist Matthew Speakman. Additionally, weaker-than-expected economic reports in recent days, including data on consumer confidence and retail sales, suggest that rising COVID cases are holding up the economic recovery from the pandemic.
That could lead the Federal Reserve to reconsider reducing its stimulus activities. In the minutes of the Fed’s most recent meeting, central bankers were considering reducing asset purchases towards the end of this year. Among the assets the Fed has been buying are mortgage-backed securities, and housing experts say the additional liquidity those transactions bring to the mortgage market allows lenders to make more loans and lower interest rates to service more. borrowers.
Last year’s refinancing boom didn’t help all homeowners equally
It remains to be seen whether existing homeowners and prospective home buyers will be able to take full advantage of this rate hike relief, no matter how long it lasts.
A report published this week by Bankrate.com found that only 19% of homeowners with a pre-pandemic mortgage have refinanced since the COVID-19 crisis began, despite record mortgage rates being offered during that time. And 47% of homeowners haven’t even considered a refinance.
And new mortgage data suggests that people of color are particularly missing out on this opportunity to secure lower interest on their home loans. The National Community Reinvestment Coalition, a consumer advocacy group, conducted an analysis of the 2020 Home Mortgage Disclosure Act data. They found that the proportion of refinance loans made to black and Hispanic homeowners decreased the last year, suggesting that white and Asian homeowners benefited disproportionately from the refinancing boom.
“The refinancing boom did little to close the nation’s persistent racial wealth and homeownership gaps,” NCRC President and CEO Jesse Van Tol said in the report.
“The disparity in who benefited from low interest rates also raises questions about the capabilities of both lenders and regulators,” added Van Tol. “Why didn’t they do more to ensure that communities of color get the same benefits from historically low interest rates?”
Lack of homes for sale means that many buyers are not saving money
Meanwhile, home buyers will be pressured to take advantage of low interest rates, thanks to the ongoing inventory challenges they face. A new economic forecast from Fannie Mae
estimates that home sales will only occur at a seasonally adjusted annual rate of 6.55 million units in the fourth quarter of 2021, considerably below the rate of 7.58 million units during the same time in 2020.
“Lack of inventories of homes for sale and continued supply chain bottlenecks experienced by home builders continue to be the main constraints on home buying activity,” said Mark Palim, deputy chief economist at Fannie Mae. , in the report. “While mortgage rates have dropped and, in theory, provide greater purchasing power to prospective borrowers, in practice, given today’s supply and affordability challenges, we expect the benefit to be limited.”