Mortgage rates dive to record lows on coronavirus frights
As the concerns about the effect that the coronavirus will have on the global economy increases, mortgage rates have dropped to their lowest level in the history of Freddie Mac’s survey of mortgage lenders, which began in 1971.
The Federal Reserve cut interest rates Tuesday in an emergency move, according to the Wall Street Journal. The 30-year fixed-rate mortgage decreased to 3.29 percent from 3.45 percent last week, according to Freddie Mac.
The good news comes with a caveat because, typically, as mortgage rates drop, home sales rise. But with the coronavirus out there, some business had started hurting, with a few closing down and a few people choosing to self-quarantine, making buyers unwilling to visit homes and more willing to delay purchases, according to the Journal.
However, the declining rates have made the mortgage industry invest in new hires, predicting a year of refinancings, while still being optimistic about new home loans.
In 2019, low mortgage rates had restored the interest in the housing market, which was showing signs of a slowdown the year before, in 2018. This drop in the rates has also led to a growth in refinancings, which last year were at their highest level since 2006, the Journal published.
Refinancing requests were up 26 percent from the previous week, and surged more than 200 percent from the same period in comparison to 2019, according to Mortgage Bankers Association data released Wednesday, the paper reported.
Over sectors, real estate is feeling the effects of the coronavirus, especially the hospitality business, as travel constraints across the country and around the world have led to massive cancelations.
Last week, a type of real estate stocks called the SNL U.S. REIT Equity index fell about 12.3 percent, according to S&P.