April mortgage rates forecast
In March, the trajectory of mortgage rates humbled forecasters.
In order to explain April mortgage rates we must first dive into how the market has been performing in the last few months. Mortgage rates fell in late February as the COVID-19 pandemic spread. The forecast for March seemed logical: Mortgage rates would continue falling if the epidemic worsened in the United States.
Instead, mortgage rates went up dramatically in March. This happened mostly because of the rush of refinances that occurred during February. There was more demand for the product than there was supply.
The forecast for April calls for fixed mortgage rates to fall below the levels seen in March, as the Fed restores stability.
The Fed clearly intends to steady mortgage rates. If it succeeds, the 30-year mortgage could settle at around 3.5% or lower through April, giving more homeowners an opportunity to refinance. Low and steady rates would please home buyers, too — many of whom are shopping via virtual house tours during the epidemic.
Fed steadies mortgage rates
The Federal Reserve can’t increase lenders’ capacity to process loan applications, but it has tools to stop the cycle of falling bond prices. Bond pricing relates to mortgage in a big way as the investors who supply mortgages use bond markets to determine how safe or risky investments are. The central bank’s first effort was March 15, when it pledged to buy at least $200 billion in mortgage-backed securities. In just one week they bought nearly $100 billion. They moved quickly to negate the trend of growing rates in the market.
Round two began March 23, when the Fed announced that it would spend as much money on mortgage-backed securities as necessary “to support smooth market functioning.”
The Fed has shown that it will buy astonishing quantities of mortgage bonds to bring stability to mortgage rates. It seems a safe guess that rates will steady, but during unprecedented times, there is never 100% certainty.
What are the current Rates?
As you most likely know, rates vary dependent on your credit and income stability. That being said, one can expect around a 3.5 interest rate this week. As mentioned earlier in the article, it seems like rates are stabilizing around this number.