Mortgage Rates Hit All-Time Low Amid Coronavirus Fears
There is now a plunge in the United States mortgage rates due to the rising economic impact caused by the coronavirus outbreak. With this, Americans are applying for new mortgages as they take advantage of the cheaper interest rates.
Global investors are starting to worry about China, urging them to secure safe-haven assets, the US Treasury Bonds for instance. According to Freddie Mac, as of March 5, the average 30-year mortgage hit an all-time low record of 3.29 percent, making it the lowest level since September. Also, the 15-year fixed-rate mortgage fell to 2.79 percent, while the 5/1 adjustable-rate mortgage fell to 3.18 percent.
A survey conducted by the Mortgage Bankers Association revealed that the Market Composite Index, a measure of the volume of the mortgage loan application, grew 15.1 percent on a seasonally adjusted basis last week. The Index rose to 29 percent compared from a week earlier on an unadjusted basis. Refinancing application spiked 26 percent from last week, making it 224 percent higher compared last year.
China and the Mortgage Market
Coronavirus is fueling market turmoil. The current situation goes to show that economic uncertainty in one part of the globe can spread rapidly and eventually affect consumers and investors.
The Chinese government continues to struggle to stop the rapid spread of the virus which started in Wuhan, China. Presently, fears stemming from the coronavirus outbreak has caused the plunge on China’s stock market. The U.S. market has also become more unstable as Dow plummeted 2,000 points recently. The global insecurity has prompted investors to secure U.S. Treasury bonds, which is a safer kind of investment compared to stocks.
Furthermore, government bond yields have also obtained a steep decline. The benchmark 10-year Treasury yield briefly reached an all-time low of 0.318 percent in overnight trading. The 10-year yield is essential in the U.S. economy as it benchmarks mortgage rates.
As aftermath, a 30-year fixed mortgage’s average interest rate also slipped to .51 percent to 3.72 percent last month. The difference may not seem as much, but it makes a huge difference for long-term borrowers.
Zillow economist Matthew Speakman said that the impact of coronavirus on human life and the economy continues to be unknown. Now that the coronavirus exists, it will remain to be the main driver of the movement of mortgage rates in the upcoming weeks.
The rise of the number of people applying for a mortgage loan may be a positive sign, but economists say that there is one problem. Recently, the inventory of homes up for sale has decreased as demands from buyers increased.
The low inventory is caused by lower construction activity following the recession, slowing the pace of household building in the U.S. Several investors also purchased homes that were eventually converted into rentals.
More in Investments & Savings
Why Cameron Diaz Calls her Super-private Marriage “Weird”
We bet you didn’t know that that Charlie’s Angles actress Cameron Diaz and Good Charlotte rocker Benji Madden have now been married for over four years....July 21, 2020
Chrissy Teigen Talks about How She Teaches Her Kids to ‘Give Back’
Chrissy Teigen is very active on social media, which makes her an easy target for detractors, especially the ones who question her parenting...July 21, 2020
You Can Buy Yourself an F-16 Combat Jet for $8.5 Million, but Conditions Apply!
Looking to buy a vehicle to show off to your rich friends? A super-cool F-16 plane will surely make heads turn and grab the...July 21, 2020
The Deadly Mobster with a Heart: Al Capone Ran a Soup Kitchen During the Great Depression
Gangster Al Capone became Chicago’s crime boss, and within four years, he earned over $40 million (valued at $550 million now)...July 20, 2020
Steve McQueen’s ‘Bullitt’ Mustang GT Sets Auction Record
The 1968 classic film Bullitt featured American actor Steve McQueen driving a cool-looking ‘muscle’ car. He even used it in a...July 20, 2020
Thinking of Buying an Electric Car? Know Why it Can be a Blessing or a Burden
Owning an electric car is environmentally friendly and sounds heavenly. You reach your destination without filling up gas; all you have to...July 20, 2020
Diddy Shares Kim Porter’s Heartbreaking Words to Him Before Her Death
Many were shocked when news of the death of model and actress Kim Porter broke. They couldn’t believe how the seemingly...July 20, 2020
Why do People Hate Celebrities Who Crowdfund with Kickstarter?
Kickstarter launched in April 2009, creating a system for common people to fund dream projects. Someone with a big idea but...July 17, 2020
Black Credit Cards are a Sign That You’ve Made It Big. Here’s Why You Need to Be Careful with It
Flaunting their Chanel handbags, Prada wardrobes and brand new Porsches, celebrities roll out in style. Every celebrity shows off the prestigious...July 17, 2020