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The Coronavirus & Mortgage Rates

As we have seen over the last couple of weeks, the Coronavirus is shaking financial markets and it’s hard to know when things will start settling down. So far, fears have prompted mortgage rates to drop. Investors are pulling their money out of stocks and putting it into steadier U.S. Treasury bonds—and when bonds perform strongly, mortgage rates tend to dip,® reports.

Although the coronavirus may slow home sales in some segments of the market, low mortgage rates will continue to encourage buyers and sellers. Refinances are hot right now and some companies are finding it hard to keep up with inquiries. The 30 year fixed is now below 3% (depending on credit) and that creates a huge incentive to make a move now.

The impact is still unknown at this time but it is assumed that home sales may slow in areas where there is discretionary buying. Since the stock market is down, people have less cash to spend so new investments may be on hold. On the flip side, people with larger cash holdings or cash down payments may decide that now is the best time to buy.

Although the Monterey Peninsula does not have a big Chinese buyer pool, other areas of California do. Foreign purchases in the U.S. over the last few years have been slipping but the Coronavirus could create a larger vacuum, according to the National Association of REALTORS®.

There are a lot of unknowns right now and where there is a down side, there is always an up!

Source: Realtor Magazine, March 2, 2020

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