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Bankrate Chief Financial Analyst Greg McBride provides an overview of the housing market amid historically low mortgage rates.
Mortgage rates have hit a new record for the 13th time this year as a resurgence in coronavirus cases weakens the economic outlook.
A new report from mortgage buyer Freddie Mac shows that the average for a 30-year fixed loan has fallen to 2.72% from 2.84% last week.
A new wave of concern over the economic recovery is pushing investors to hedge against risk, pushing mortgage rates down.
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“Mortgage rates fall when the economic outlook worries investors, and there is a lot to worry about,” NerdWallet real estate and mortgage expert Holden Lewis told FOX Business. The bleak economic outlook is pushing investors into safe assets, such as mortgage-backed securities, and the result is a lower mortgage rate.
The re-emergence of the coronavirus brings back memories of the economically damaging stay-at-home orders of spring, according to Lewis. On top of that, disappointing retail sales in October are bad news for what is expected to be a pre-holiday spending surge. Retail sales in the United States, which account for about a third of consumer spending, rose only 0.3% in the month, which comes even as retailers lure shoppers with sales and discounts. early party discounts online and in store.
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And after the number of Americans seeking unemployment help jumped for the first time in five weeks, with 742,000 claims reported by the Labor Department, another round of layoffs looms as more companies close or impose restrictions. Federal and state unemployment benefits will expire on December 26, putting an estimated 12 million workers in one of the CARES Act’s two main programs at stake.
Besides the weak growth of the economic outlook over the next few years, low inflation and low interest rates are helping to limit long-term bond yields and, by extension, mortgage rates, according to Bankrate’s chief financial analyst .com, Greg McBride. The historically low rates back to back have boosted demand in the housing market.
The National Association of Realtors reported that home sales were up, up 4.3% from September to October at a seasonally adjusted rate. Len Kiefer, Freddie Mac’s deputy chief economist, also saw a construction leap. Deputy Chief Economist, Len Kiefer.
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“While the economy as a whole still faces significant challenges, payroll employment is down 10 million from February, the housing market has been a bright spot,” Kiefer said. “The housing market is still making up for a lost spring, but the total volume of transactions in 2020 is on track to increase compared to last year.”
However, many obstacles still stand in the way for potential buyers.
“Low mortgage rates make it easier for buyers to afford affordability, but the limited number of homes available for sale and constantly rising prices make life difficult for first-time buyers in particular,” said Greg McBride of Bankrate at FOX Business. “Because demand exceeds supply, it can also lead to bidding wars which further drive up prices.”
The recession has also hurt many potential homeowners who have suffered loss of income.
Home buyers who depend on mortgage financing are also being squeezed out by large investment firms who buy homes with money to rent them out.
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