Even with this week’s uptick, very low rates are providing a significant boost to the housing market that continues to hold up well during this time of uncertainty.
Freddie Mac has released a report on the current state of American mortgage rates [1], revealing they are gradually increasing. Also according to the report, homebuyer demand across the nation is holding steady and strong.
In particular, demand appears to be entry-level homes, specifically those which are within a buyer’s budget and reach due to lower mortgage rates and will thus not adversely affect their material finances or place them in over their heads with housing bills. Despite a small uptick in mortgage rates experienced this week, rates are undeniably low still, making home ownership a real possibility and thus boosting the housing market.
In fact, these low mortgage rates encouraging more buyer boldness and activity are allowing the American housing market to continue holding up, even amid such surreal times of angst and uncertainty due to the current COVID-19 crisis.
George Ratiu, Senior Economist with realtor.com [2], offered his expert insights on the Freddie Mac report and the current state of America’s housing market: “Today’s Freddie Mac report shows the 30-year fixed mortgage rate rose 8 basis points from last week’s record low, to 2.96 percent. The gain came as bond investors sold U.S. Treasury notes, in anticipation of a significant new government bond offering, aimed at boosting fiscal stimulus for the weaker-than-expected economic recovery. Today’s unemployment claims data indicated that the number of Americans receiving jobless benefits declined to 15.5 million, a welcome change in direction, but still worryingly elevated.”
Ratiu then added some information regarding how buyers may yet still have some issues purchasing, due to the gap in supply and demand: “This year’s record low mortgage rates have offered a significant boost to real estate demand, keeping affordability even with a year ago. However, the number of homes for sale continues to evaporate at a scorching pace, as buyers seek havens from expensive urban cores in an age of social distancing and remote work. Sellers remain locked in place, as most of them are also buyers looking for their next home, and have to contend with a market rife with multiple bids and price escalation clauses. While mortgage rates offer increased affordability, the current inventory shortage is pushing prices close to 10 percent above year-ago levels, and is making finding a home very difficult.”