May 2020 mortgage rates in California for both refinance and purchase transactions.
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 May 2020 Mortgage Rates:
Heading into May 2020 purchase and refinance mortgage rates are near all-time lows.
The opportunity for mortgage rates to move lower is limited and it will depend on how the market reacts to the impact the Coronavirus has on the US economy. Since mortgage rates are near all times lows and demand is high the mortgage industry has little incentive to push mortgage rates lower.
The risk for purchase and refinance mortgage rates in May is that investors start to believe the economy will bounce back faster than expected. If this happens Mortgage Backed Securities will seel off and consumer mortgage rates will move higher.
When it comes to locking in your mortgage rate it’s important to avoid trying to time the market. If the rate and terms you are being offered make sense then it’s usually a good idea to go ahead and lock in your rate.
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!
May 2020 Mortgage Rate Forecast For California:
Here are our May 2020 mortgage rate forecasts for California:
- 30 year fixed rates below 3.50%
- 20 year fixed rates below 3.375%
- 15 year fixed rates below 3.125%
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 May.
May 2020 Mortgage Rate Chart:
Here is a quick reference guide to May 2020 mortgage rate possibilities (these are not quotes) and the payments associated with each level based on various conforming loan amounts. See our important disclosure below.
30 Year Fixed Rate Mortgage:
20 Year-Fixed Rate Mortgage:
15-Year Fixed Rate Mortgage:
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.
Coronavirus and Mortgage Rates
Since mid-March 2020 the Coronavirus has had an impact on mortgage rates.
Purchase and refinance mortgage rates reached all-time lows as fears the Coronavirus would cause a significant worldwide recession.
Mortgage brokers, lenders, and banks received an unprecedented amount of loan applications which created a major issue for the industry. Too many applications caused processing and funding issues for some lenders. To slow the number of mortgage applications mortgage brokers, lenders and banks received rates moved higher (this is in addition to other market factors).
Late May Update:
The Coronavirus still dominates the news cycle as the country begins the process of opening up. States like Texas, Georgia, Florida, and others have been open for weeks. Overall mortgage rates have remained low during the month of May. In fact, mortgage rates are lower in May 2020 than they were back in April (for most types of loans). And this is a broad industry observation as some lenders were lower in April and stayed flat in May.
Jerome Powell Speech, May 13th
Here are a few highlights from Powell’s speech.
- The Fed’s view on negative interest rates has not changed. And it’s not something they are looking at.
- All FOMC participants are against negative rates.
Overall there no impact on mortgage rates.
Mortgage Rate FAQ’s
Here we answer some popular questions about mortgage rates in California.
Will Mortgage Rates Go Lower In May 2020?
We anticipate mortgage rates in May will be lower than they were in April. The key thing is not to set an unrealistic mortgage rate target. Over the last 15+ years, I have seen mortgage rates shoot higher unexpectedly so if you’re offered a rate that works for your budget it’s probably best you lock-in rather than waiting on a small improvement that may never happen.
Is A 3.375% or lower 30 Year Fixed Mortgage Rate Good?
If you were in the market for a mortgage back in October/November 2018 your mortgage rate options were in the high 4% to low 5% range on a 30-year fixed-rate mortgage. A 3.375% 30-year fixed-rate mortgage is a fantastic rate and you should not hesitate to lock that in provided the fees are reasonable.
Is A 3.00% or lower 15 Year Fixed Mortgage Rate Good?
Without question, a 3.00% 15-year fixed mortgage rate is a great rate and you should not hesitate to lock that in provided the fees associated with the 3.00% are reasonable.
It’s important to think of the big picture and weigh the risks associated with trying to time the market.
How Do I Get Zero Closing Costs On A Refinance?
The first and perhaps the most important step is to work with a reputable mortgage broker and a Loan Officer with years of experience. Second; it’s important to remember that not loan applications qualify for a zero closing cost refinance.
Low loan amounts, low credit scores, high LTV condos, and rental properties are all examples in which it’s difficult to obtain a zero closing cost refinance.
Will A Mortgage Forbearance Have a Negative Impact On Me?
It might and we suggest you only seek out a mortgage forbearance if you absolutely need to.
Mortgage forbearance is when the borrower delays his/her mortgage payment for three months. The program was designed to help those that were negatively impacted by the Coronavirus shutdown. However, the emergency program does not require you to prove you were negatively impacted and as a result, some are taking advantage of the program.
It’s not 100% clear on when a borrower will need to repay those three months and it’s not 100% clear how creditors (ie mortgage lenders, credit card companies, auto loan companies, etc.) will factor in the forbearance into their decision making.
Lastly; the government announced that they were going to go after companies who took advantage of the Small Business emergency loan program that they announced back in March. So there is always a chance that the Federal government will penalize those who took advantage of the mortgage forbearance program which is another reason why you should only utilize the mortgage forbearance program if you absolutely need to.
Will Non-QM Loans Come Back?
Non-QM Loans (aka subprime loans) disappeared back in April. With a slowing economy and huge job losses, the industry quickly moved away from providing these types of loans.
Will they come back?
At some point, yes but it will probably be a long time before we see them again. And when they do come back you’ll probably see a significant premium to offset the risk the market associates with these types of loans.
Over the last year, non-QM mortgage loans probably had a 1% – 3% higher interest when compared to conforming mortgages. When non-QM mortgages return I would not be surprised to see that bump to 3% – 5% higher and over time that spread should move lower.
What Happened To Jumbo Mortgage Loans?
Like Non-QM loans, Jumbo mortgage loans also seemed to disappear back in April. Not completely though as some lenders still offer them.
For mortgage brokers, lenders, and banks that still offer these loans, you are seeing tighter standards and higher rates even for those that have excellent credit and a large downpayment.
Will Market Stability Help Improve Rates?
Generally speaking, market stability is good for mortgage rates. However, the bigger issue right now are the questions of how the forbearance program will impact mortgage lenders over the next six to twelve months.
What Happened To Cash Out Refinances?
At the end of April many mortgage brokers, lenders, and banks decided to end their cash-out loan programs (not all but many). Some mortgage brokers, lenders, and banks still offer cash-out refinances but the options for these types of mortgages are limited.
The issue stems from the mortgage forbearance program and how Fannie Mae and Freddie Mac are handling cash-out loans that go into forbearance (essentially they won’t buy the loans if someone goes into forbearance).
Until this issue is cleared up but the two mortgage giants the cash-out refinance programs for consumers will continue to be limited. For additional mortgage information visit our Scoop.it! page.
Update Mortgage Guidelines May 2020
The biggest update to mortgage guidelines is the tighter lending standards that all mortgage brokers, lenders, and banks are implementing.
Some mortgage companies have ended their cash-out refinance programs and some who still offer the program are charging more to take cash-out of your home.
A small percentage of mortgage companies are requiring liquid reserves on all their mortgage programs. Lastly, Home Equity Lines of Credit (HELOCs) are less abundant and come with more restrictive guidelines as well.
Economic Calendar For May 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 May 2020 mortgage rates.
To start things off we have:
Friday – May 29th:
- Core PCE: Core PCE declined to 1.0.
- Chicago PMI: Chicago PMI declined to 32.3.
Thursday – May 28th:
- GDP Prelim Q1: The first quarter GDP Prelim number came in at -5.00%.
- Durable Goods April: Durable Goods for the month of April declined -17.2%.
Wednesday – May 27th:
- Mortgage Market Index: The Mortgage Market Index came in at 746.5; slightly higher than last week’s 727.1 number. The biggest increase in applications came from the purchase market.
Tuesday – May 26th:
- Consumer Confidence: Last month Consumer Confidence came in at 86.9 and this month it only dipped to 86.6.
- New Home Sales: The New Home Sales report showed an annual rate of 623,000 new units; last month it was 627,000 units.
Thursday – May 21st:
- Philly Fed Index: The Philly Fed index came in at a decline of -43.1% after last month’s decline of -56.6%.
- Weekly Unemployment Claims: Another brutal week for unemployment claims; 2,438,000 Americans filed for unemployment benefits. Nearly forty million Americans have filed for unemployment benefits in the last two months. Continued claims increased to just over 25,000,000.
Wednesday – May 20th:
- Mortgage Market Index: The Mortgage Market Index declined from 746.7 to 727.1. Refinance applications decreased while purchase applications increased. Mortgage rates for both refinance and purchase applications are at an all-time low as we head into a long three-day weekend (Memorial Day).
Friday – May 15th:
- Retail Sales: Retail sales declined -12.00% compared to last month’s decline of -8.7%.
- Inflation Outlook: The 1y inflation outlook increased to 3.0% and 5y inflation outlook increased to 2.6%
- Consumer Sentiment: Consumer sentiment increased from 7.18 to 73.7.
Thursday – May 14th:
- Weekly Jobless Claims: Weekly jobless claims decreased from 3,169,000 to 2,981,000. Over 36 million Americans have filed for unemployment benefits in the last two months.
Wednesday – May 13th:
- Mortgage Market Index: Overall the index was flat 744.2 vs 746.7. Purchase applications increased while refinance applications declined.
- Core Producer Prices: Core Producer Prices declined -0.3% after increasing last month 0.2%
Tuesday – May 12th:
- Consumer Price Index: Monthly CPI declined 0.8% and the annual rate was positive at 1.4% (down from last month’s report of 2.1%.
Friday – May 8th:
- Employment Report: Expectations were for 21,000,000 jobs lost after last month’s decline of 701,000. The unemployment rate is expected to come in 16% (last month it was 4.4%). The numbers came in better than expected. The number of jobs lost in April was 20,500,000 and the unemployment rate came in at 16.0%. Bonds sold off on the report and stocks rallied.
Thursday – May 7th
- Consumer Credit: Last month’s report came in at 22.33 and investors are anticipating this month’s report to come in at 15.00.
- Weekly Jobless Claims: Last week the report came in at 3,839,000 and had little impact on consumer mortgage rates. This week the market is expecting the report to show 3,000,000 Americans filed for unemployment however the report showed 3,169,000 people filled for unemployment. This brings the total to over 33 million Americans who have now filed for unemployment since the economy shut down.
Wednesday – May 6th:
- ADP Employment Report: Investors are anticipating the report to show 20,000,000 jobs were lost last month and the report came in with 20,236,000 jobs lost in the month of April.
- Mortgage Market Index: The weekly Mortgage Market Index came in at 744.2 after last week’s report at 743.4. Purchase applications increased from 208.0 to 220.0 and refinance applications decreased from 3901.4 to 3835.7.
Tuesday – May 5th:
- ISM Non-Manufacturing Report: Last month the report came in at 48.0 and this months report came in at 26.0
Friday – May 1st:
- ISM Manufacturing PMI: Expectations are for a reading of 36.9 and the reading came in at 41.5.
The Job Report And Mortgage Rates
The BLS jobs report showed the economy took a devasting hit in April; over 20 million jobs lost and an unemployment rate of 14.7%. Many feared the numbers would be worse however there is no getting around the fact that this is a huge hole in the US economy.
The bond market sold off a bit post report. The more important reports, more important to the bond market and mortgage rates, will be in July, August, and September. The reason is many analysts and investors believe the economic recovery will be a V shape; meaning a sharp bounce back to a more normal economy.
If that is going to happen we’ll need to start seeing job growth before the fall to confirm a V-shaped recovery.
May 2020 Mortgage Rate Average
We’ll update this section as we move further into May however to start off the month we’re seeing the following averages.
- The average 30-year fixed-rate in California is 3.375%.
- The average 20-year fixed mortgage rate is below 3.25%.
- The average 15-year fixed-rate in California is 3.00%.
This is an average of everyone we’re seeing; from less than perfect credit to excellent credit. Please keep in mind that May 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.
Mortgage-Backed Securities & Treasury Snapshot:
May 26th – May 29th:
Mortgage-Backed Security UMBS 2.0 started the week around the 101.81 level and the UMBS 2.5 coupon started at the 103.56 level. The 10y Treasury yield was at the .69% level to start the week.
At the end of the week, Mortgage-Backed Security UMBS 2.0 was at the 101.94 level and the UMBS 2.5 coupon was nearing the 103.69 level. The 10y Treasury yield was at .65%.
May 18th – May 22nd:
Mortgage-Backed Security UMBS 2.0 started the week around the 101.77 level and the UMBS 2.5 coupon started at the 103.27 level. The 10y Treasury yield was at the .70% level to start the week.
At the end of the week, Mortgage-Backed Security UMBS 2.0 was at the 101.89 level and the UMBS 2.5 coupon was nearing the 103.52 level. The 10y Treasury yield was at .65%.
May 11th – May 15th:
Mortgage-Backed Security UMBS 2.0 started the week around the 101.61 level and the UMBS 2.5 coupon started at the 103.52 level. The 10y Treasury yield was at the .69% level to start the week.
At the end of the week, Mortgage-Backed Security UMBS 2.0 was at the 101.98 level and the UMBS 2.5 coupon was nearing the 103.44 level. The 10y Treasury yield was at .64%.
May 1st – May 8th:
Mortgage-Backed Security UMBS 2.0 started the week around the 102 level and the UMBS 2.5 coupon started at the 104 level. The 10y Treasury yield was at the .61% level to start the week.
At the end of the week, Mortgage-Backed Security UMBS 2.0 was at the 102.5 level and the UMBS 2.5 coupon was nearing the 103.77 level. The 10y Treasury yield was at .68%.