Increased refinancing volume led Fannie Mae to raise its 2020 estimate by $300 billion and 2021 projection by $280 billion.
Companies in the mortgage business were already focused on processing a lot of loans and generating efficiencies before the latest uptick in business hit.
Paradoxically, mortgage rates actually increased this past week, even as the 10-year Treasury yield plumbed new depths, likely because lenders are too busy to handle the influx of applications.
Mortgage lenders could benefit from the surge in refinancing due to widening market spreads, and that could help offset damage to servicing rights portfolio valuations, according to Keefe, Bruyette & Woods.
Capacity constraints among mortgage lenders are leading to wider spreads between mortgages and the 10-year Treasury yield even after it remained below 1% for an extended period this week.
Mortgage rates hit their lowest point since Freddie Mac began tracking this data in 1971, as the 10-year Treasury yield fell below 1% after the Federal Open Market Committee's surprise short-term rate cut.
Fears stemming from the coronavirus have resulted in lower mortgage rates and more business for now, but if the situation deteriorates further, consumers could decide to put off buying a home.