It was a historic moment when it comes to these kinds of records.
As we make our way through 2020, the coronavirus (COVID-19) outbreak continues to disrupt industries left, right, and center. The real estate sector is no different. But in contrast to many other segments, the COVID-19 changes in real estate spell a positive trend for the market.
After months of ups and downs, the housing market has now started reeling back from affected activity. On the other hand, the so-called coronavirus mortgage rates are still in place. In fact, they just touched an all-time low for the second time in the past few months.
Mortgage Rates Dip Below 3 Percent
In the week ending July 30, 2020, the 30-year fixed rate mortgage recorded average rates of 2.99 percent. This was the second time that the mortgage rate dropped below 3 percent. The first time it happened was just under three weeks ago on July 16. At the time, the rate had fallen to 2.98 percent.
This drop in mortgage rates comes from their recent downward trajectory during the COVID-19 outbreak. At the same time last year, the bracket was floating around 3.75 percent.
The Performance is Consistent With Market Movements
The near-record lows in the 30-year fixed rate mortgage are staggering. But they are not shocking for anyone monitoring the coronavirus housing market.
The mortgage rates had plunged from 3.45 percent on February 27 to 3.29 percent on March 5. Since then, they are mostly recording new lows in their figures. In fact, the mortgage rates have not crossed the 3.3 percent threshold since three months. This indicates a concerning outcome for select lenders. But on the other hand, it gives a reason to rejoice to existing and potential homeowners.
Low Mortgage Rates Have Driven Up Demand
The 30-year fixed rate mortgage is often cited as the indicator of market conditions. Recorded by Freddie Mac since 1971, the mortgage rate typically drives up activity whenever it takes a dip. Seeing this historic pattern, it is no surprise to see that its current near-historic low has also boosted market demand.
According to industry experts, the current movement of coronavirus mortgage rates has led to greater market activity despite the pandemic. Those who had been holding back on buying a home are actively closing on their desired listings. Similarly, those who were looking to refinance their mortgage are also submitting applications.
For now, mortgage applications for new sales are 21 percent higher than the same time last year. Comparatively, refinance applications record a staggering increase of 121 percent as compared to the same week last year.
Market Activity May See a Further Boost
Apart from the 30-year fixed rate mortgage, the lower rates are also seen among other brackets. For instance, the 15-year fixed rate mortgage averaged at 2.51 percent, indicating a 0.69 drop from last year.
As a result of these mortgage rates, the coronavirus housing market is enjoying a much-needed lift despite challenging conditions. The level of activity is set to increase and may post a trend of improvement in both sales and construction.