Mortgage rates fell sharply over the last seven days, with big declines early in the week tapering off into more gradual reductions in recent days. Rates have been relatively stable lately — at least by recent standards — suggesting that the historic intervention by the Federal Reserve has at least partially achieved its goal of easing market volatility and ensuring the trains keep running.

But looking at average levels on only conventional loans only tells part of the story. The mortgage industry remains under significant stress, as forbearance programs enacted to support borrowers grappling with coronavirus fallout also greatly increase risks elsewhere in the industry and unintentionally place a huge burden on servicers who now have to continue paying investors — essentially being asked to keep filling the pot, despite no water coming in. The threat of missed payments also introduces the potential for greater risk for lenders, resulting in tighter lending restrictions and a less-active market for non-agency and less conventional loans.

Taken together, even though average rates have appeared to stabilize, volatility remains throughout much of the market.