COVID-19 helped push mortgage rates to record lows. Now, the 2020 presidential election is the catalyst to the 12th record low in mortgage rates this year. The unpredictable election was the reason it pushed mortgage rates even lower.
“Interest rates dropped to another record low this week … because of uncertainty around the election results,” said George Ratiu, senior economist at realtor.com.
According to Freddie Mac, the first week in November saw a drop to 2.87% in the 30-year fixed mortgage rate. The same week last year the 30-year fixed was 3.69% and the last week in October 2020 it was 2.81%. The 15-year fixed, FHA loans and jumbo mortgages also saw record lows.
The mortgage rates are somewhat mirroring the yield on the 10-year U.S. Treasury. The uncertain economic environment such as the elevated unemployment rate and low returns due to the Federal Reserve’s quantitative easing has prompted bond investors to focus on mortgage-backed securities.
These record-low rates are prompting homeowners to refinance. According to the Mortgage Bankers Association (MBA) mortgage applications to refinance are 80% higher than they were this time last year.
The low mortgage rates are also fueling the demand in buyers. The pandemic has caused a surge in the housing market. So many are looking for a larger space because of stay-at-home orders. In fact, homes sold faster this October than September which has not been seen since 2011.
“With a rising second wave of COVID cases, the challenge of social distancing continues to drive peoples’ quest for a housing solution,” said Ratiu.
The National Association of Realtors also reported that the “Summer Peak” home price of $350,000 remained through the fall. The low mortgage rates and lack of inventory are rising home prices. Buyers are seeing bidding wars across all of the country’s’ regions.
“October continued to defy seasonality as new records were broken by both buyers and sellers,” said Andrew Abrams, chair of the Denver Metro Association of Realtors’ market trends committee.
“Sellers continued to have little competition as escalation clauses, appraisal gap waivers and “as-is” offers were frequently used, while buyers had to fight hard, making concessions in all of the ways referenced above, to secure a place they could call home,” he said.
If you are thinking of purchasing a home now is the time. With record-low mortgage rates, buyers are able to purchase more home for their money. A Realtor can help with each step in the purchasing process and get you the best price for the best home.
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