- The week of January 27 saw interest rates at 3.625%.
- Some aggressive lenders may bring rates down to 3.5% soon.
- Mathew Graham with Mortgage Daily News thinks rates could go down to 3.375%.
The coronavirus is shaking financial markets around the world. Here in the US, investors are flocking to the relative safety of bonds. A possible result of that “flocking” could be expressed in falling interest rates as interest rates are most often tied to the bond market.
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Mathew Graham, COO with Mortgage Daily News, told InmanNews that the rate of 3.625% was “widely available” and that “…today, January 27, brings (a rate of) 3.5% into the mix for more than just a few of the most aggressive lenders.”
Graham also added that the housing market “…is only one to two solid days away from rates from 3.375% if global forces and market news continue keeping investors in bonds.”
Actually, now is a great time for falling interest rates. Strong buyer demand is fueling sales as well as new single-family home construction. Homebuilder sentiment hit a 20-year high in December 2019 and, despite, new home sales slipping just a bit, new home sales are showing a strong +23% higher rate than was seen in December 2018.
Affordability is absolutely crucial for both homebuilders and homebuyers. With prices for existing homes continuing to rise, it’s more than clear that builders need to build more entry-level homes in order to generate sales. Lack of supply within this price point, caused the number of sales within this lowest price tier to fall sharply in December…there simply were not enough homes available to buy.
Robert Frick, corporate economist with the Navy Federal Credit Union, said, “Considering half of home shoppers say they can’t afford a house priced above $300,000, more builders must start reducing prices to increase sales. With housing starts surging, we should see plenty more new homes on the market this year, but if (these homes) are not more affordable, sales will be stunted and many more newly formed families will be shut out of homeownership.
“A drop in interest rates should help buyers afford today’s higher prices and…help more borrowers qualify for loans,” concluded Graham.
Thanks to CNBC’s Diana Olick for source data.