April 2020 mortgage rates in California for both refinance and purchase transactions have been super volatile during the month. Mortgage lenders and bond investors are extremely nervous about a potential systemic breakdown in the market. Due to bond market disruptions and overwhelming consumer demand for low rates we’re seeing significant delays in the underwriting and closing of new files.
When starting a new loan application it’s important to send in all of your documentation to avoid additional processing delays.
We offer low-rate Conventional, Jumbo, and FHA fixed-rate mortgages throughout the state of California. If you would like a quote specific to your transaction please be sure to contact me directly (you can use the contact form below or call my direct number: 1-800-550-5538). I have over 15 years of experience providing low rates, fast closings, and exceptional service.
Opportunities And Risks For April 2020 Mortgage Rates
It’s been a volatile four weeks for the mortgage industry as the country deals with the impacts of the COVID-19. During the last week of February and the first week of March, the industry took in a massive amount of loan applications as mortgage rates moved to all-time lows. The industry went from taking in $1 billion – $1.5 billion a day in new volume to daily intakes of $5 to $13 billion per day. That amount of volume was more than the industry could handle and the result was mortgage rates moved higher.
April 2020 mortgage rates in California are starting the month higher than the lows of March. The opportunity to see mortgage rates move lower will depend on lenders working through last month’s volume and it will be dependent on reduced market volatility.
There are two things mortgage rates don’t like; inflation and market volatility. Inflation is not a concern but volatility is and that is the biggest risk to mortgage rates in April.
Why Is Volatility Bad For Mortgage Rates?
Because for one it makes it more difficult for mortgage lenders to predict the value of a mortgage post-closing. And when it’s harder to predict the value of a mortgage in 30, 60 or 90 days that creates a big risk for lenders. To offset that risk mortgage lenders increase consumer mortgage rates.
California Mortgage Calculator
Using a mortgage calculator to figure out your monthly mortgage payment is an essential part of buying a home in California or refinancing a current mortgage. Use our free mortgage calculator to help you determine what you can afford and if you have questions please don’t hesitate to ask!
April 2020 Mortgage Rate Forecast For California
Here are our April 2020 mortgage rate forecasts for California:
- 30 year fixed rates below 3.75%
- 20 year fixed rates below 3.625%
- 15 year fixed rates below 3.50%
This is based on a loan amount of $350,000, primary home, excellent credit (740 or higher credit score), and a Loan-To-Value ration below 75%. We may see periods in which rates spike higher however overall we believe there will be opportunities to lock at or below these levels throughout the month of April.
April 2020 Mortgage Rate Average
Here are the mortgage rate averages for April 2020:
- The average 30-year fixed-rate in California is 3.50%.
- The average 20-year fixed mortgage rate is below 3.375%.
- The average 15-year fixed-rate in California is 3.125%.
This was an average; from less than perfect credit to excellent credit. Please keep in mind that April 2020 mortgage rates adjust daily; sometimes multiple times during a day. For a quote specific to your situation please be sure to contact us directly.
April 2020 Mortgage Rate Chart
Here is a quick reference guide to April 2020 mortgage rate possibilities (these are not quotes) and the payments associated with each level based on various loan amounts. See our important disclosure below.
Mortgage Rate Chart – 30 Year Fixed Rate Mortgage:
|Term||Loan Amount||Mortgage Rate||Payment|
Mortgage Rate Chart – 20 Year Fixed Rate Mortgage:
|Term||Loan Amount||Mortgage Rate||Payment|
Mortgage Rate Chart – 15 Year Fixed Rate Mortgage:
|Term||Loan Amount||Mortgage Rate||Payment|
Important Disclosure: The above is not a quote; nor is it an offer to lend. It’s only a generic example of various mortgage rates, loan amounts, and payments. Our mortgage rate chart is meant to educate and inform our readers. The current market may be higher or lower than the examples listed in these rate charts. Also; mortgage rates can and often do adjust multiple times a day. If you would like additional mortgage information be sure to check out our Scoop.it! the page which has a collection of great articles.
COVID-19 and April 2020 Mortgage Rates
It’s no secret; COVID-19 is having a big impact on mortgage rates.
The virus is the main reason mortgage rates moved to all-time lows back in early March and it will most likely continue to dominate the news cycle for the foreseeable future. Will that impact be the same in April? I don’t think it will even if things continue to get worse.
The two main reasons are as follows (and were previously mentioned);
- Mortgage lenders will be spending the majority of April working through the applications they received in March. Until they do they are less likely to put out rates more closely tied to market conditions.
- The second reason is that mortgage lenders want to see less volatility in the bond market before adjusting rates to current market conditions.
If these two issues are somewhat resolved in April then mortgage rates will be more impacted by COVID-19 news.
Mortgage Rate FAQ’s
Here we answer some popular questions about mortgage rates in California.
How Come Mortgage Rates Moved Higher In April?
We’ve already touched on the two big reasons (loan application volume and market volatility). A third reason is liquidity. The Fed started to purchase a massive amount of Mortgage-Backed Securities back in March.
That triggered a liquidity issue for mortgage lenders who hedge their loan pipeline. I know it sounds odd but the Fed move actually hurt mortgage lenders (in the short-medium term). So to reduce the amount of cash they would loan mortgage lenders increased rates.
Is A 3.75% 30 Year Fixed Mortgage Rate Good?
Absolutely; especially if you compare it to where mortgage rates were 12+ months ago. I understand that everyone wants the lowest ever mortgage rate, but waiting for that could prove costly. If you are locking below 4.00% on a 30 year fixed mortgage rate you are locking in a rate that is significantly below historical averages.
Is A 3.375% 15 Year Fixed Mortgage Rate Good?
A 3.375% 15 year fixed rate is a good mortgage rate to lock in at. The rate is well below historical norms and just above all-time lows.
Avoid the trap of not doing anything and missing the opportunity to lock in a low rate. That being said; everyone is different. So if you currently have a low rate then waiting to see what happens makes sense. But if you are purchasing a home or refinancing out of a higher rate mortgage you really should not hesitate to lock in a 3.375% 15-year fixed-rate mortgage.
How Do I Avoid Paying Closing Costs On A Refinance?
The first thing we need to do is explain what a no closing cost loan means. Yes, a no closing cost loan means you are not directly paying any closing costs however what most people don’t know is how that is possible.
Simply put; you are not getting anything for free.
To obtain a no closing cost refinance the mortgage lender increases the rate and issues a “lender credit” to cover all of the closing costs.
Now, the best way to avoid paying closing costs on a refinance is to have excellent credit, refinance your primary home, a loan amount between $200,000 and $510,4000, and a Loan-To-Value ratio at or below 60%. Another important factor is not taking cash out.
Keep in mind it’s a very hard market (early April) to do a no closing cost refinance as there are little to no credits being offered by mortgage lenders.
What about a purchase mortgage?
Doing a no-cost purchase mortgage is possible however it’s much harder than a no-cost refinance mortgage. The reason is that it’s harder is that the closing costs associated with purchase mortgages are much higher than a refinance mortgage.
What Happened To Non-QM Loans?
Non-QM loans (aka subprime loans) vanished almost overnight towards the end of March 2020. The reason? Liquidity issues caused by the Fed’s market intervention. There is no timeline for the return of Non-QM loans but some are saying at a minimum it will be months.
Why Are Jumbo Mortgage Rates So Much Higher?
Right now (early April) the market for jumbo mortgage loans is super small. Not many banks and investors are looking to supply financing to the jumbo market. For the most part, there is only one market for mortgage loans and that is loans that follow Fannie, Freddie, FHA, and VA guidelines. The reason has been mentioned in other sections; there is a big liquidity problem and rather than fund one $900,000 mortgage it’s easier to fund two or three $300,000 mortgages.
As the market volatility subsides Jumbo mortgage rates will move towards more normal levels. And that should happen prior to Non-QM loans coming back to the market.
Update Mortgage Guidelines April 2020:
It’s been a chaotic month in the mortgage industry and we’re seeing a sizable shift among some of the largest mortgage lenders.
Chase announced they are no longer allowing cash-out loans along with much stricter guidelines for rental properties and self-employed borrowers. Also, they are requiring a minimum of a 700 FICO score and six months of cash reserves on all files.
Wells Fargo announced a similar move when they raised their minimum FICO score requirements. What does this all mean for homeowners and homebuyers?
Obtaining a mortgage is going to get more difficult in the coming months. There still are mortgage lenders offering cash-out loans and loans to those with less than perfect credit but as time goes on fewer and fewer lenders will offer these loans.
Now more than ever it’s vital you work with an experienced Loan Officer that has at least five to ten years of experience. April 2020 mortgage rates remained flat for the most part but guidelines for the industry dramatically changed.
April 2020 Fed Meeting and Mortgage Rates:
On April 29, 2020, the Fed concluded their most recent two-day meeting and made the following announcements:
- The Fed will continue to buy Treasuries, Agency Residential, and Commercial Mortgage-Backed Securities.
- The Coronavirus is causing a sharp decline in economic activity
- They will evaluate incoming data (national and global) and that will shape future policy decisions
- They left their target interest rate unchanged
Basically, the Fed is saying we’ve already done a lot, and let’s see what happens. As for mortgage rates; this was a non-event. Keep in mind that the Fed does not set mortgage rates but it can have an influence of the market where mortgage rates originate (the Mortgage-Backed Securities market).
The one potential benefit for mortgage rates is that they will continue to buy Mortgage Backed Securities however that was expected.
Economic Calendar For April 2020:
Here we cover the daily economic events that might impact mortgage rates. After the report comes out we’ll update the post with that information and comment on if there is a potential impact on the Mortgage-Backed Securities market and consumer mortgage rates.
The first week of the month will be important for April 2020 mortgage rates.
To start things off we have:
Thursday – April 30th:
- Weekly Unemployment Claims: Weekly unemployment claims decreased this week. From 4.4 million claims to 3.8 million claims. In six weeks more than 30 million Americans filed an unemployment claim.
- Core PCE Inflation: The Core PCE report came in as expected; a decline of -.1%.
- Chicago PMI: Last month the report came in at 47.8 and this month it came in at 35.4.
Wednesday – April 29th:
- Mortgage Market Index: Last week the Mortgage Market Index came in at 768.5 and this week it came in at 743.5.
- Advance Q1 GDP: Expectations were for a 4.00% drop and the reading came in at a 4.8% drop.
Tuesday – April 28th:
- Consumer Confidence: The Consumer Confidence report decreased from 120.00 to 86.9
Friday – April 24th:
- Durable Goods: Durable Goods went from 1.2 last month to -14.4 this month.
- Consumer Inflation Expectations: The 1y reading came in at 2.1% and the 5y reading came in at 2.5%.
- Consumer Sentiment: Consumer sentiment actually increased this month (from 71.0 to 71.8)
Thursday – April 23rd:
- Unemployment Claims: Expectations were for 4.2 million claims and the number came in at 4.4 million claims. Nearly 27 million Americans have lost their job since February.
- Markit PMI: Last month the reading came in at 40.9 and this month it came in at 27.4.
Wednesday – April 22nd:
- Mortgage Market Index: The index declined from 770.7 to 768.5. The purchase component increased from 182.6 to 186.4 however the refinance component declined from 4242.7 to 4206.7.
Thursday – April 16th:
- Housing Starts: Housing starts have declined by 22.3% to 1.2m units (annual rate).
- Philly Fed Index: One of the largest declines ever; last month -12.7 to this month’s decline of -56.6.
- Unemployment Claims: Another massive number; 5.3m claims this week.
Wednesday – April 15th:
- Mortgage Market Index: The most recent survey came in at 770.7. Purchase applications continue to decline while refinance applications increased.
- Retail Sales: Last month retail sales declined -0.5%; this month Retail Sales declined by 8.7%.
- NAHB Housing Market Index: This monthly index moved from a 72 down to a 30.
Thursday – April 9th:
- Unemployment Claims: Another brutal week as 6.6 million Americans file for unemployment claims. In the last three weeks over 15 million Americans have lost their ability to earn an income.
- Consumer Sentiment: The monthly number came in at 75.0 after last month’s reading of 89.1.
Wednesday – April 8th:
- Mortgage Market Index: The mortgage market index came in lower this week (718.2 vs 874.6) which is good news for the industry. As previously mentioned, mortgage lenders are working through a huge amount of volume and we need to see the index come in at these levels for the rest of April so that lenders have time to get through all their current applications.
Friday – April 3rd:
- BLS Employment Report: The latest report showed 701,000 people lost their job in March and the market was expecting the report to show 163,000 lost jobs. The unemployment rate jumped to 4.4% and wages increased by 0.4%.
- ISM Non-Manufacturing PMI: The data came in higher than expected (52.5 vs 44.0).
Thursday – April 2nd:
- Unemployment Claims: Another huge report; 6,648,000.00 claims were filed this week. That puts the two-week total right around 10 million unemployment claims. To put that in perspective the two-year total for 2008 and 2009 was under 9 million – for two years combined!
Wednesday – April 1st:
- Mortgage Market Index: Last week’s reading came in at 758.4 and this week the reading came in at 874.6. We’d like to see that number go back below 800 and stay there so that mortgage lenders can work through their loan application volume from March.
- ADP National Employment: Last month’s reading was 183,000 jobs created and the market is expecting this month’s report to show 150,000 jobs lost. The report was better than expected; it showed a loss of 27,000 jobs.
- ISM Manufacturing PMI: Last month’s report was 50.1; barely above the important 50.0 mark. Analysts are expecting this month’s reading to come in at 45.0. This report also came in better than expected; 49.1.
March’s Job Report And Mortgage Rates:
On Friday, April 1, 2020, we’ll have the March 2020 jobs report. The market is expecting the report to show nonfarm payrolls declined by 100,000 and the unemployment rate to jump to 3.8% (last month it was 3.5%). Average earnings are expected at 0.2% after last month’s reading of a 0.3% gain.
The report was far worse than expected:
- 701,000 jobs lost
- An unemployment rate of 4.4%
Next month’s report is going to be significantly higher than this. The number of jobs lost will be in the millions. Many remain optimistic that most of these jobs will be recovered once we get through April/early May. Some economists, analysts, and investors believe this is a realistic timeline for the coronavirus to peak and then subside.
However, even if that is the case there is no guarantee that consumers and business activity will return to pre-Cornonavirus levels.
Mortgage-Backed Securities & Treasury Snapshot:
April 27th – April 30th:
Mortgage-Backed Security UMBS 3.0 started the week around the 105.38 level and the UMBS 3.5 coupon started around the 105.45 level. The 10y Treasury yield was at the .62% level to start the week.
At the end of the week, Mortgage-Backed Security UMBS 3.0 was at the 105.4 level and the UMBS 3.5 coupon was nearing the 106 level. The 10y Treasury yield was at .60%.
April 20th – April 24th:
Mortgage-Backed Security UMBS 3.0 started the week around the 105.20 level and the UMBS 3.5 coupon started at the 105.47 level. The 10y Treasury yield was at the .59% level to start the week.
At the end of the week, Mortgage-Backed Security UMBS 3.0 was at the 105.39 level and the UMBS 3.5 coupon was at the 105.47 level. The 10y Treasury yield was at .60%.
April 13th – April 17th:
Mortgage-Backed Security UMBS 3.0 started the week around the 105.42 level and the UMBS 3.5 coupon started at the 105.52 level. The 10y Treasury yield was at the .76% level to start the week.
At the end of the week, Mortgage-Backed Security UMBS 3.0 was at the 105.41 level and the UMBS 3.5 coupon was at the 105.70 level. The 10y Treasury yield was at .64%.
April 6th – April 10th:
Mortgage-Backed Security UMBS 3.0 started the week around the 105.25 level and the UMBS 3.5 coupon started at the 105.88 level. The 10y Treasury yield was at the .65% level to start the week.
At the end of the week, Mortgage-Backed Security UMBS 3.0 was at the 105.83 level and the UMBS 3.5 coupon was at the 105.95 level. The 10y Treasury yield was at .72%.
April 1st – April 3rd:
Mortgage-Backed Security UMBS 3.0 started the week around the 104.80 level and the UMBS 3.5 coupon started at the 105.80 level. The 10y Treasury yield was at the .60% level to start the week.
At the end of the week, Mortgage-Backed Security UMBS 3.0 was at the 105.03 level and the UMBS 3.5 coupon was at the 105.84 level. The 10y Treasury yield was at .59%.