Matthew Speakman, an economist with Zillow, said a worsening of the virus outbreak could drive mortgage rates even lower.
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Rates on a 30-year mortgage were the second-lowest they’ve been in three years and the drop may partially be because of fears of a global Coronavirus outbreak.
As of Monday, Feb. 3, there had been 11 confirmed cases of the Coronavirus disease in the United States and 361 total deaths in China, according to the New York Times.
At the same time, Freddie Mac reported Thursday that the 30-year fixed-rate mortgage averaged 3.51 percent for the week ending January 20. A year ago at this time, the 30-year fixed-rate mortgage averaged 4.46 percent.
“This week’s mortgage rates were the second-lowest in three years, supporting homebuyer demand and leading to higher refinancing activity,” Sam Khater, Freddie Mac’s Chief Economist, said in a statement. “Borrowers who take advantage of these low rates can improve their cash flow by lowering their monthly mortgage payments, giving them more money to spend or save.”
Matthew Speakman, an economist with Zillow, tied those dropping mortgage rates to the Coronavirus concerns just one day prior. Speakman said that while mortgage rates remain near multi-year lows, there’s a chance they could plummet further if the outbreak continues to worsen. Conversely, if the situation improves, a swift move to higher rates could follow, Speakman said.
“Mortgage rates fell over the past week, heavily influenced by growing global fears surrounding the ongoing coronavirus outbreak that continued to drive market movements this week,” Speakman said.
“While the epidemic’s impact on global commerce remains unclear, markets appear to be erring on the side of pessimism, preparing for slowdowns in growth and, potentially, another cut to the Federal Reserve’s benchmark interest rate,” Speakman added.
“Investors sought out safer assets en masse this week, particularly on Thursday and Friday, snapping up Treasurys and pushing yields — and mortgage rates — down as a result.”