The Russian invasion of Ukraine has stopped mortgage rates' upward swing, but probably not for long.
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The Russian invasion of Ukraine has stopped mortgage rates' upward swing, but probably not for long.
FreddieMac said today that the "cascading effects" of the war in Ukraine have created uncertainty. Usually, geopolitical turmoil causes mortgage rates to go down, as investors seek safe havens.
But economists at the government-sponsored enterprise expect rates to increase in the coming months. That echoes other economic forecasters, who said that the war in Ukraine will be inflationary. Fed Chair Pro Tempore Jerome Powell, speaking yesterday before Congress, agreed.
"The economic effects are highly uncertain," said Powell. "We have seen energy prices move up further, and those increases will move through the economy, push up inflation and weigh on spending."
Some mortgage lenders are also preparing for some turbulence. Rocket, in its annual financial report, wrote that the war in Ukraine "... could cause consumer confidence and spending to decrease."
Rocket also wrote that the resulting economic fallout could "adversely affect the credit quality of some of our loans and investments and the properties underlying our interests."
At least in the short-term, rates are down. But it's unclear if the war in Ukraine will lower them enough to bring back any refi business. Are you taking any steps to adjust your strategy in light of potential mortgage rate jitters?
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With refinance volumes decreasing and originators experiencing layoffs, lenders are looking for a way to diversify their offerings and gain new business in order to maintain profits.
The average 30-year-fixed rate mortgage declined to 3.76% for the week ending March 3, down from 3.89% in the previous week, amid the geopolitical tensions caused by Russia's war in Ukraine.
The serious delinquency rate in the Federal Housing Administration loan portfolio is now less than half its pandemic peak, and the Department of Housing and Urban Development said sustained improvement will factor in to whether it adjusts mortgage insurance premiums.
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