Question

What is happening in the mortgage markets ?

Answer 1

Due to the pandemic, there is an irregularity in the mortgage market. Sudden rise in refinance made the mortgage market irregular. In early March, mortgage rates fell to as low as 3 percent which exaggerated the refinancing activity.

According to Mortgage Banker's Association (MBA), the refinancing index reached to it's peak since 2009. Later, in mid-March bond market was locked up which influenced the mortgage rates to rise up high. There are certain reason which behind it such as Secondary market reached to it's peak capacity of buying the Mortgage Backed securities (MBS), investors were converting their investments into cash and lenders set high prices for new loans.

Federal Reserve made commitments to buy the trasuries and ageny MBS and providind aids to commercial and municipal bond market which will influence the mortgage market and will make the mortgage rates lower.