Mortgage Rates In Free-Fall – Economic Update

By Seth Dolce

Citizens Bank

The Dow is on the rise in early morning trading as the benchmark attempts to pare back losses and the 603 point bludgeoning it endured Friday.

The selloff was rooted in Coronavirus fears and the disruptive economic potential of the virus as well as a waning confidence in the economy.

Chinese Markets continue their plunge Monday as China’s Central Bank injects $174 Billion into the economy in an attempt to stabilize the nation’s financial system.

This medley of concerns is causing money to exit equities and seek safe haven.

With money flowing in, bonds have rallied pushing yields down to the 1.5% mark on Friday, its lowest level since September.  The Benchmark is down 22% so far this year.

Part of the yield curve inverted again Friday.  That marked the second time it has done so in a week, broadcasting what many view as recession smoke signals.  Along with the 10-Year falling, the entire long end of the curve has fallen.  This tells a story of concerns surrounding macro growth.

This concern was echoed by the Fed, which indicated they’ve moderated their stance on growth.

All of this has applied downward pressure on mortgage rates.

These lower rates present a great opportunity for both homeowners and those looking to become one.

Homeowners can refinance and lower their monthly mortgage payment immediately.  In some instances saving thousands per month. Refinancing also makes sense if you have a variable rate mortgage and can lock into a new, longer term. Or reset the clock on your existing term.  Homeowners may also want to pull out money from their home with a cash-out refinance.

For those in the market looking to buy a home, your buying power just increased.  And your monthly payment on the house you were considering just went down dramatically.  Perhaps the new, lower monthly payment now makes that dream home affordable?

If you’re contemplating a refinance or the purchase of a new home and want to see how much you can save with these lower rates, please give us a call.

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