Mortgage Rates Stay Flat, Unmoved by Low Treasury Yields, Servicer Aid

Mortgage rates were flat over the past week, evidence that some signs of distress in the market are gradually easing, even as market conditions remain tight and rates stay higher than other indicators suggest they should be.

The wild swings in mortgage rates experienced in mid-March an early April appear, for now, to be a thing of the past – rates on 30-year, fixed loans moved within a very narrow bound over the last week. But while this newfound stability is generally positive, it is somewhat surprising that two developments normally expected to have a notable impact on mortgage rates barely moved the market.

First, a dramatic decline in oil prices helped push Treasury yields to their lowest level in a month and close to their all-time low. Normally, Treasury yields are a good indicator for mortgage rates, but that relationship has frayed in the last month. Second, the much-anticipated announcement of a relief package for mortgage servicers – who had expressed concern over their ability to advance payments to investors amid a surge of forbearance claims – also had little immediate impact on mortgage rates. On the surface, this aid was generally intended to provide relief for the servicers, but a look under the hood suggests that the package won’t be as beneficial as some were hoping.

As a result, mortgage rates barely budged, and the underlying concerns that have plagued the market for the last few weeks remain in place.

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