The rapid international spread of the coronavirus is striking fear in investors and shaking financial markets. As of Monday morning, there have been 89 confirmed cases in the U.S. How and why is this impacting the housing market? Coronavirus fears have prompted mortgage rates to drop because investors are pulling their money out of stocks and putting it into steadier U.S. Treasury bonds. When bonds perform strongly, particularly, the 10-year Treasury note, mortgage rates tend to dip
Low mortgage rates will entice buyers and sellers to get into the market. With mortgage rates likely to reach all-time lows, buyers will want to lock in, even with growing economic concerns.
Foreign investors may find it more difficult to invest in the U.S. market due to more restrictions on travel. Nevertheless, low mortgage rates may entice some buyers to purchase now rather than wait. NAR reported last week that contract signings climbed 5.2% in January compared to the previous month and were up 5.7% from a year ago. The 30-year fixed-rate mortgage fell to 3.45% last Thursday, Freddie Mac reported. “Buyers right now are trying to juggle whether or not they should jump in when mortgage rates are this low,” Ali Wolf, director of economic research at Meyers Research, told realtor.com®. “What looks like a home that’s out of reach may actually be very affordable on a monthly payment schedule.”
In the short term, at least, low mortgage rates could cause a boost in home sales, but it will depend on if the virus continues to spread in the U.S. Some people could put a home purchase on hold,” According to data from The Centers for Disease Control and Prevention, there have been 88,443 confirmed cases of the coronavirus world-wide. There have been 3,041 deaths from the virus, 2,912 of which have been in China, mostly elderly, and those with compromised immune systems.