Average mortgage rates remain near all-time lows, despite a modest increase over the last seven days. But, as has been the case in recent weeks, these relatively easy borrowing conditions remain available largely only to those with a hefty down payment, high credit score and seeking a plain-vanilla loan.
Because of persistent underlying uncertainty throughout the market, borrowers not meeting these criteria continue to be presented with much higher-than-expected rates when filing an application. More than 7.5% of outstanding mortgage loans are currently in forbearance – a program that allows the borrower to pause monthly payments, penalty-free, but that also limits short-term revenue prospects for lenders. What's more, lenders are finding it challenging to accurately quantify risk at a time when dramatic shifts in the economy are occurring seemingly every few days.
So while average rates are likely to remain low for those who qualify, until there is more certainty in the broader economy, expect these spreads between rates to remain.
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