As of February 28th of 2020, the average rate for a 30-year fixed-rate mortgage was 3.45%, down from 3.60% just two weeks prior. This is the fourth consecutive week that mortgage rates have dropped, with the majority of the decline happening within the past two weeks.
The drop in mortgage rates come as the US stock markets have experienced some of their worst losses since the 2008 financial crisis, due to concerns about the potential economic impact of the coronavirus epidemic. With the virus now spreading across Europe and the US, there is a great deal of uncertainty about how the crisis will play out and its associated implications for the economy. This has caused investors to flee to the safety of low-yielding government bonds, pushing down yields on mortgages and other longer-term debt.
The current low mortgage rates provide an advantageous opportunity for homebuyers, who can now take advantage of the lower rates and lock in long-term savings, regardless of where the market goes in the coming weeks and months. Homeowners also stand to benefit from the current market conditions, as they may be able to refinance their existing mortgage with the lower rates to save money on their monthly payments.
However, despite the lower mortgage rates, buyers still face certain challenges in taking advantage of the opportunity. These include rapidly rising home prices, which have not kept pace with the decline in interest rates; tight inventory levels; and unusually strict lending standards set by banks to reduce their risk exposure. It remains to be seen whether this combination of factors will temper the enthusiasm of potential homebuyers.
The effects of the current coronavirus outbreak on the mortgage market are likely to remain uncertain for the foreseeable future, as the spread of the virus continues and its ultimate economic impact remains to be seen. Another factor to consider is the potential impact of the 2020 presidential election, which could affect the direction of mortgage rates depending on the outcome.
Mortgage rates have dropped to their lowest levels in almost three years amid a global outbreak of the novel coronavirus. The decrease signals a favorable opportunity for homebuyers to take advantage of lower interest rates and lock in long-term savings. Additionally, current homeowners are able to refinance their existing mortgage with the lower rates, potentially saving significant amounts of money on their monthly payments.
But while these low rates provide an advantageous opportunity, potential buyers still face certain obstacles in taking advantage of it. These include rapidly rising home prices that have not kept up with the decline in mortgage rates; tight inventory levels; and unusually strict lending standards imposed by banks to reduce their risk exposure.
The coronavirus outbreak is expected to continue affecting mortgage rates for the foreseeable future. Investors are fleeing to the safety of low-yielding government bonds, pushing down yields on mortgages and other longer-term debt. Another factor that could affect the direction of mortgage rates is the 2020 presidential election.
For now, homebuyers should take advantage of the current opportunity and explore ways to finance or refinance their mortgage while mortgage rates are still low. Consulting with real estate professionals or loan officers is the best way to ensure that buyers make informed decisions.
This article was contributed on Oct 22, 2023