Mortgage rates have declined in recent months, even amid banks’ economic struggles due to the pandemic. While the sudden shift in mortgage rates was initially attributed to the Federal Reserve’s response to the economic crisis, a closer look reveals that the banking industry might be to thank for the dip.

The COVID-19 pandemic has put extra strain on the economy, causing banks to reassess how much risk they’re willing to take. As a result, many banks have limited their offerings of adjustable-rate mortgages (ARMs). This means that fewer ARMs are available to borrowers, leading to a decrease in competition and lower rates.

Additionally, banks are becoming more cautious when it comes to credit, making it tougher for borrowers to get approved for a mortgage. Borrowers with a higher credit score are more likely to be approved than those with lower scores, and the increased restrictions could also be a factor in the decline of mortgage rates.

Mortgage rates are expected to remain low in the near future, but as the economy continues to recover, they may gradually rise. Borrowers looking to lock in a mortgage should take advantage of the current low rates while they last. Additionally, taking extra steps to improve credit worthiness can help borrowers increase their chances of being approved at these low rates.

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