Stock market spells good things for homebuyers
Mortgage rates dropped 23 basis points in December and have hovered around 4.5 percent ever since — a number not seen since early last year. According to one expert, they might not be finished dropping either.Verify your new rate (Aug 24th, 2019)
Rates might drop more
Mortgage rates have declined recently, providing some much-needed relief to on-the-fence homebuyers. And according to Mark Fleming, chief economist at First American, we have stock market volatility to thank for it.
“A steep sell-off in U.S. stocks caused by investors seeking safe-haven from global and domestic economic uncertainty caused the 10-year Treasury yield to decline, and mortgage rates fell alongside it,” Fleming said.
Though Fleming doesn’t expect rates to drop across all of 2019, there could be additional rate declines still.
“Uncertainty regarding world economic events and global trade agreements may lead to a further sell-off in equity markets, adding more downward pressure on mortgage rates,” he said. “If this occurs, we can expect the market potential for existing-home sales to rise further.”
On the back of December’s rate declines, the market saw a 23 percent spike in mortgage applications, according to the Mortgage Bankers Association.
Lower rates mean more inventory
Another great thing for buyers? That’s the extra housing inventory these low rates will bring about. According to Fleming, homeowners can now “feel more comfortable about entering the market.”
“This period of rising rates has dissuaded existing homeowners from selling their home – why move when it will cost more each month to borrow the same amount from the bank?” Fleming asked. “Additionally, rising rates have reduced affordability in some high-cost markets, discouraging some potential first-time home buyers from entering the market. So, rising mortgage rates discourage both existing homeowners and some first-time home buyers from entering the market.”
According to Fleming’s predictions, if January closes out with a 4.5 percent rate average, then existing home sales will increase by nearly 7,000. The drop in rates in December increased potential existing home sales by 0.3 percent.Verify your new rate (Aug 24th, 2019)
Get today’s rates
Want to take advantage of today’s low mortgage rates? Then shop around and see what rates you qualify for today.Verify your new rate (Aug 24th, 2019)