Freddie Mac reported today Thursday, March 5th The average 30-year fixed-rate mortgage hit a record 3.29% this week, the lowest level in its nearly 50-year history. Meanwhile, mortgage applications increased 10% last week from one year ago and show no signs of slowing down. Given these strong indicators in rates and sales, as well as recent increases in new construction, it’s clear the housing market continues to be a positive force for the broader economy.
In the same direction, MBA Associated Vice President of Economic and Industry Forecasting, Joel Kan pointed out that the refinancing applications grew 26% in the last week due to the mortgage rates were down in the lowest in the last 7 years. The reason for all these rush was initially the spread of the CoronaVirus fear and possible consequences on the economy, rushing a demand on the US Treasury Bills, bringing their yields down, and forcing the mortgage rates down.
Mike Fratantoni, MBA’s Senior Vice President and Chief Economist, said: ” The 30-year fixed-rate mortgage dropped to its lowest level in more than seven years last week, amidst increasing concerns regarding the economic impact from the spread of the coronavirus, as well as the tremendous financial market volatility. Refinance demand jumped as a result, with conventional refinance applications increasing more than 30%”.
Regarding Purchasing activity, Mike Frantantoni said: “We are now at the start of the spring homebuying season. While purchase applications were down a bit for the week, they are still up about 10 percent from a year ago. The next few weeks are key in whether these low mortgage rates bring in more buyers, or if economic uncertainty causes some home shoppers to temporarily delay their search”.
The FED announced on Tuesday, March 3rd, an emergency rate cut of 50bps (0.50%) with the purpose of bringing some confidence to the markets due to the CoronaVirus. However, the surprising rate cut proved to disillusion financial markets, thus setting off a wave of panic that benefited bonds. Excess demand for bonds means indirectly lower mortgage rates.
It is important to point out that one clear effect caused by the CoronaVirus is that people are avoiding being in mass gatherings, public events, and in some cases personal or business meetings. The fear of getting the virus might cause a delay in the housing demand.
Mike Frantantoni finally said: “The next few weeks are key in whether these low mortgage rates bring more buyers, or if economic uncertainty causes some home shoppers to temporarily delay their search”.
If you want to find out if these low mortgage rates will help with your home loan qualification, contact me and I will bring to you a list of good mortgage brokers that will help you with your home loan. Remember, these are historic low mortgage rates and will not repeat in the future.
[Form id=”1″]Sources:
• MBA Mortgage – Mortgage Market Update – March 5, 2020
• Freddie Mac – Mortgage Rates Hit All-time Low
• MBA Mortgage – Mortgage Applications Increase in Latest MBA Weekly Survey
• Mathew Graham – Rates at All-Time Lows No Thanks to Fed’s Emergency Cut