Along with the markets, the mortgage industry has had a volatile few weeks as investors react to the coronavirus danger. Marketplace host Kai Ryssdal spoke with Vivian Gueler, a mortgage broker and the chief financial officer of Pacific Trust Group in Los Angeles.
Mortgage rates were very low a few weeks ago but have gone up again due to demand for refinancing and economic uncertainty. “We saw basically no place for mortgage-backed securities, so the market just fell out,” Gueler said. “Literally, it fell out overnight.”
Even though the Federal Reserve has provided liquidity to banks, Gueler hasn’t seen the effects of the intervention in her work.
“The government is pouring trillions into the economy right now, and they’ve basically assured banks: we’re going to give you the money you need,” Gueler said. “I think we’re still in a state of panic right now. Hopefully within the next week or so we’ll see things calm down.”
In the meantime, Gueler is getting calls from clients who have lost their jobs or want to take cash out of their properties. She’s also seen lenders back out of a few home sales that had been under contract.
“I think the market is going to be at a standstill for the next few weeks, because it’s hard to even go see a house and get an offer accepted,” Gueler said. She expects real estate values to drop during that standstill, but she’s confident the market will bounce back in the long term.