20 April . 2020
Mortgage Rates Near All Time Lows
A dramatic drop in mortgage rates may help give home buyers a leg up in a competitive real estate market according to The New York Times. Fears over the coronavirus outbreak and its economic impact have sparked the most dramatic stock market since the 2008 financial crisis. But as the market levels, there is a silver lining for potential homebuyers: Mortgage rates have been driven down to near all-time lows.
"Homeownership is really the single best way to build wealth," says Laurie Goodman, co-director of the Housing Finance Policy Center at the Urban Institute in a recent article. “The median homeowner has a net worth of around $230,000 — nearly half of that is in the form of equity in their home,” she says. “Meanwhile, the median renter has total wealth of less than $5,000.”
If you have good credit, rates on a 30-year fixed-rate mortgage have dropped from about 4.5% to around 3.5% over the past year. Goodman says that this effectively makes the same-priced house from a year ago more than 10% cheaper today in monthly mortgage payments. So, she says, someone who was on the fence a year ago about whether they could afford to own a home "is going to find it very attractive at this time."
Current low rates have already caused a boom in refinance activity, and demand among home-buyers remains elevated, in spite of the short supply of homes for sale. Continued downward movement in the 10-year Treasury would normally signal downward movement in mortgage rates. Where they stand now, Treasury yields suggest that mortgage rates still have some room to move lower, Rick Sharga, a mortgage industry veteran and president and CEO of CJ Patrick Company, a financial-services consulting firm told Yahoo finance. “I wouldn’t be surprised to see 30-year loans with 3.0% rates before things settle back down,” Sharga said