Mortgage rates fell sharply this week to their lowest level in months.

Less than a year after initially announcing it, the organization that governs Fannie Mae and Freddie Mac said last week that they would remove a policy that places an additional 50 basis point fee on mortgages that are being refinanced. The program was intended to protect mortgage lenders from pandemic-driven losses, but it ultimately made it more expensive for homeowners to refinance their home loan and artificially increased the average mortgage rate.

Rates immediately fell sharply on the announcement, a move that was extended later in the week as mounting concerns about the delta variant of COVID-19 and its potential impact on expected economic growth led many investors to sell off stocks and seek the safe haven of bonds. While the retreat in rates has reversed slightly in the last couple days, this week was the latest manifestation of the downward pressures that have kept mortgage rates in check even as the economy continues to thaw from its pandemic-imposed freeze.

Absent a meaningful improvement in vaccination rates or a shift in monetary policy, upward risk to mortgage rates appears limited in the near term.