How COVID-19 Improved Mortgage Rates in the US
By Space Coast Daily // August 6, 2020
The crisis of the COVID-19 pandemic caught not only the United States but most of the world as well, off-guard. No one, even China, where the virus is believed to have originated, was prepared enough to take the threat of the virus head-on.
The SARS-CoV2, the virus that causes the COVID-19 disease, is not as deadly as other viruses out there, with an approximate overall mortality rate of only 2%.
However, the threat mostly was due to the fact that it is highly infectious and can kill by worsening existing medical conditions of the infected.
Aside from the health concerns the virus threat had caused, it also caused several economic concerns, posing a challenge even to the wealthiest and most economically-stable countries.
As a step in the attempt to restart the economy and save it from further decline, the Federal Reserve several weeks ago cut its overnight interest rate top nearly zero per cent, bringing rates down to a record-low for several years.
This meant that financing for a car, cash, a business, and mortgage loan rates are now lower than ever.
How low did the interest rates drop, as an effect of the COIVD-19 pandemic? Here is an overview:
What do the Freddie Mac rates say?
The Federal Home Loan Mortgage Corporation showed the following data as of June.
• 30-year fixed rates saw an 8-basis point fall. From 3.84% last year, it reached a record low of 3.13%. On the other hand, average fees fell from 0.9 to 0.8.
• 15-year fixed terms saw a decline four basis points to 2.58%, from 3.25% last year.
• Lastly, five-year fixed terms fell by one basis point to a record low of 3.09%. As compared to the rates last year, which is at 3.48%, the recent rates fell by a total of 39 points. However, the average fee stayed the same at 0.4 points.
What do the Mortgage Bankers’ Association rates say?
The Mortgage Bankers’ Association quoted the rates to be at the following:
• Average interest rates for a 30-year fixed term with FHA backing fell to 3.33%. Points for 80% LTV loans decreased from 0.24 to 0.23.
• Average interest rates for a 30-year fixed term with a conforming loan balance fell to 3.30%. Points for 80% LTV loans decreased from 0.30 to 0.29.
• Finally, the average 30-year rates for jumbo loan balances fell to 3.67% from a previous 3.70%. Points for 80% LTV loans, on the other hand, saw an increase from 0.26 to 0.28.
There is no way to tell how long will the effect of the COVID-19 pandemic last on the sectors of the world, including the financing industry.
Moving forward, will we see lower rates in the coming weeks? If we base on the trends in the past several months, we can only expect rates continue to fall. However, anything could happen, and numbers could go up or down in just a matter of a short time.
If you are one of the few people who have been lucky enough to keep their income or credit at the same level since the pandemic started, or maybe was even able to improve it, now is the perfect time to refinance and take advantage of record-low rates that keep on getting low as the weeks go by.
By taking advantage of these rates, you are opening up to yourself the rare opportunity of saving thousands, if not tens of thousands of dollars by locking in a deal with a low-interest rate.
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