Let’s face it — the last couple of months have been tough on all of us. Heading into the spring with a blazing economy and a historically favorable housing market for homebuyers, we all seemed to be on cruise control. Then came COVID-19. Now a sense of uncertainty seems to have taken over almost every facet of our lives…and unfortunately, that includes the mortgage industry.
As concern about coronavirus (COVID-19) spreads across the globe, markets are reacting to its real and perceived threats to economic growth.
Treasury yields are (way) down, which has in turn pushed interest rates in the mortgage market down as well. In the short-term, that can be a good thing, especially for anyone looking to refinance.
But while low mortgage rates may have lenders hustling for business, the economic impact of the coronavirus on the mortgage market will undoubtedly be a challenge in the long term.
THE ECONOMY
A booming economy means folks are in the market, plain and simple. An uncertain economy usually means just the opposite. While the stock market will ebb and flow as it has throughout its history, supply chain disruptions will hurt certain sectors of the economy in the longer term, with some of those ramifications being felt by ordinary citizens and families.
Manufacturing industries in the Midwest and South rely on outputs from China. While Midwestern states may not suffer the largest blows due to Chinese struggles, we won’t be immune from both direct and indirect consequences across a variety of industries.
THE MORTGAGE INDUSTRY
These economic realities play as big of a role in the mortgage industry as low interest rates. In fact, in the short term, it will probably play a larger role.
Chief Financial Analyst for Bankrate, Greg McBride, was recently quoted as saying “The falling yield on the 30-year year Treasury bond is reflective of the concerns about the impact of coronavirus on the U.S. and global economies, however, the 30-year bond doesn’t directly affect mortgage rates. Instead look to the 10-year Treasury note, where the yield has fallen below the 1.5 percent threshold and is drawing closer to the all-time low of 1.37 percent.”
THE MORAL OF THE STORY
Is there uncertainty out there? For sure!
But now is still a good time to shop your mortgage. Rates on 30 & 15 fixed rate mortgages are low, which if utilized, could mean paying off a loan much quicker and saving a mountain of cash in the process.
In the mortgage world, every situation is unique. Your variables may mean bettering your situation by looking now, while others might not.
One thing is for certain…it never hurts to ask! Contact me today and we’ll make sure you have the info you need to make a good decision!
