Rates continue their downward plunge after some inflation scares. Both the 30-year fixed rate mortgage and 15-year fixed rate mortgage fell 9 basis points to 3.25% and 2.72% respectively.
The Consumer Price Index grew 2.6% from last March, exceeding expectations. This was in large part due to a 9.1% monthly and 22.5% annual increase in the price of gasoline. While the Federal Reserve is convinced this will only be a temporary rise in inflation, Treasury yields still fell in response. In other market-altering news, the FHFA recently signed a contract on GSEs Fannie Mae and Freddie Mac’s behalf, disallowing the use of the “GSE Patch.” This “patch” exempted the GSEs from the QM (qualified mortgage) rule stating that all mortgages purchased in the secondary market had to have a debt-to-income ratio below 43%. Under this new agreement, Fannie Mae or Freddie Mac must now adhere to QM rules. As a result, lenders may start tightening up their requirements in order to continue selling their loans to the GSEs. This, however, does not apply to government loans which have their own unique requirements.