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The average 30-year fixed-rate mortgage fell nine basis points on Thursday to an average rate of 3.51%, according to Freddie Mac’s Primary Mortgage Market Survey.
“This week’s mortgage rates were the second-lowest in three years, supporting homebuyer demand and leading to higher refinancing activity,” said Sam Khater, Freddie Mac’s Chief Economist. “Borrowers who take advantage of these low rates can improve their cash flow by lowering their monthly mortgage payments, giving them more money to spend or save.”
Thursday’s rate is a drop from the prior weeks’ 3.60%. This time last year, the 30-year fixed-rate mortgage averaged 4.46%.
A report by FOX Business states that mortgage rates fell and applications surged due to investors’ growing concerns of how China’s coronavirus could impact economic conditions.
The Mortgage Bankers Association reported that applications surged 7.2% higher from the week prior for the week ending on January 24.
Danielle Hale, Chief Economist at realtor.com, told MReport that concerns about the coronavirus’ impact have driven investors into the security of bonds, “accelerating” the drop in 30-year mortgage rates.
“We expect these lower rates to stick around until the virus is better understood, the transmission is slowed, and treatment improves,” Hale said.
She added lower rates are one of several factors helping shift the rent-buy tradeoff back toward buying, even though renting remains the short-term winner in many large markets.
Hale, though, said prospective buyers find homes continue to be an issue, as the market is missing 3.8 million homes.
“Additional new construction is sorely needed to alleviate the current shortage and meet rising demand,” Hale sais.
Bloomberg reported Thursday that investors remain concerned that the spread of the virus could derail economic recovery.
The Dow Jones rebounded Thursday, but a key piece of the U.S. yield curve inverted for the first time since October 2019.
According to Bloomberg, Federal Reserve Chairman Jerome Powell said Wednesday that the viral outbreak will likely hit the Chinese economy and could expand, but it was too early to tell if the U.S. would be impacted.
“The market maybe doesn’t really know how to process the impact of this particular event,” Kathryn Kaminski, Chief Research Strategist at AlphaSimplex Group, told Bloomberg. “People may be moving on headlines or there may also be general concern about not being sure what this means.”
