How Covid_19 completely changed mortgage rates

It is no surprise Covid has influenced mortgage interest rates in the last 12 months. The coronavirus and its effect on the economy in particular the financial markets have been unprecedented, to say the least. Here’s how covid changed interest rates and what you can expect going forward if you’ve been thinking about refinancing a home or buying a house…

It was March 2020; this new airborne and unknown virus took America by storm. It was at this time the financial market perceived great danger of an economic collapse0 akin to the financial crisis. During this time credit lines were suspended, tightening of credit happened overnight, Jumbo mortgage investors withdrew from lending, and mortgage interest rates shot up to 5.5% with 3.5 discount points. Following the turmoil in the markets, the Fed stepped in aggressively by purchasing large-scale securities resulting in a calming effect on the markets so desperately needed. Mortgage rates followed suit and fell considerably with the full faith and backing of the US government.

The summer of 2020 is when the coronavirus truly started to take shape, deaths were up, and it was doom and gloom for the financial markets while calm slipped into greater fear mode. When the financial market slip into fear mode stocks do not typically look as attractive and the bond market starts looking a lot more attractive to someone looking to place their money where they can get safety and security on their money which kept mortgage rates the low 3’s. As we entered the fall of 2020 interest rates fell even further down approaching the election of 2020, with the future of the economy very much on uneasy ground at the point, that coupled with covid deaths, and new infections caused mortgage rates to hit the mid 2’s and they remain, and rates remained way through January of 2020. Enter 2021 new administration, and the vaccines are now starting to come into play, people are beginning to get vaccinated, and the economy looks like it’s on the right track however inflation is started to rear its ugly head, and more investors are getting more skittish about inflationary pressures.

Fast forward to the present, mortgage rates are now back down to the high 2’s, resulting in a second opportunity to scoop up that interest rate that you’ve thought you lost in 2020, call it a second chance. Your 2nd chance opportunity is now also producing home appraisal waivers for those who are well qualified. Add in the adverse market-free removal of Fannie Mae and Freddie Mac and you have a solid recipe for refinancing your current mortgage or borrowing money very economically for the acquisition of a new home.

The great investor Warren Buffett said, “I buy when there’s blood in the streets” when there is doom and gloom that is an opportunity to purchase a house as well as secure a hysterically low potentially untouchable mortgage rate that we may never see again in our lifetime. So, if you purchase or refinance a home in the context of “this is my one opportunity to get a rate and an affordable housing payment that I could never get before” now is the time to pull that trigger.

Looking for an incredibly attractive rate for a new mortgage? Get a no-cost quote today!


Why your income is the biggest driver of purchasing power

Why your income is the biggest driver of purchasing power

When it comes to purchasing a home, your monthly income is the most influential factor,…

How to ease lending qualifications when buying a home

How to ease lending qualifications when buying a home

Hey there, fellow dreamer! Are you ready to take the leap into homeownership and turn…

5 practical ways to increase your purchasing power when buying a home

5 practical ways to increase purchasing power when buying a home

Buying a house today can be an arduous task, especially when you consider the many…

Scott Sheldon's The Mortgage FIles Blog

How the housing industry may be affected by the upcoming real estate changes

The recent settlement involving the National Association of Realtors regarding real estate agent compensation has…

View More from The Mortgage Files:

begin your mortgage journey with sonoma county mortgages

Let us make your mortgage experience easy. Trust our expertise to get you your best mortgage rate. Click below to start turning your home dreams into reality today!