NORMALLY – WHEN STOCKS FALL, RATES FALL (BUT NOT THIS WEEK)
The Dow Jones stock market index peaked at 29,551 only 1 month ago (on Feb 12th).
As I type this on March 13th, the index has fallen to 21,362 – a staggering 27% drop.
Initially, as everyone knows, mortgage interest rates plummeted along with the fall of the stock market in general.
This correlation between falling stocks and falling rates is the “old normal” – mortgage interest rates almost always fall when stocks tank b/c investors move from stocks to bonds (treasuries and mortgage-backed securities).
But “normal” no longer applies to anything in the financial markets.
As I have been explaining, 10-Year Treasury rates have been falling along with the stock market, but mortgage rates have not.
This is both b/c lenders are trying to fend off excess volume by pushing up rates and b/c lenders need to offer higher rates to attract enough investors to buy all the mortgage-backed securities flooding the market.
In any case, I am repeating all of this again b/c rates are higher today than where they were yesterday – even though the stock market has continued to fall b/c of coronavirus concerns.
DELAYS – CAUSED BY CORONAVIRUS AND VOLUME
The entire mortgage industry is now starting to see delays in mortgage loan processing caused by two things: (1) absenteeism and work stoppages altogether b/c of coronavirus concerns; and (2) an inability to handle the massive influx of refi volume.
People outside the mortgage industry are often unaware of how many people are involved with the processing of a mortgage loan. These people include appraisers, appraisal managers, closing specialists/processors, virtual assistants, title officers, escrow officers, underwriters, disclosure specialists, doc drawers, funders, IRS staff (for tax transcripts), insurers (for hazard insurance), and numerous other assistants and staff members.
With so many people out or disrupted b/c of coronavirus precautions, delays are much more common.
On top of this, lenders got whacked by a massive onslaught of refinances that are also slowing things down.
Once again – we are holding our own at JVM, but borrowers should expect one to two-day delays with their transactions for reasons that are beyond our control.
