Mortgage Rates Plummet as Housing and Real-estate Effects Begin to Ripple in Other Sectors of the Economy
The real-estate landscape seems to be experiencing its worst time in history since 2008 after rates for home loans plummeted in tandem with the broader bond market. In fact, it is poised to be the worst setup for the real estate market in the United States for a decade!
Reduction in mortgage rates
Indeed, the August 16th so the fixed-rate mortgage of the 30-year mark average at 4.53%, experiencing a dip of about six points. Additionally, info from Freddie Mac, professional mortgage provider, also showed that the fixed mortgage rate for the 15-year category had also experienced a slight dip from 4.05% to 4.01%.
If that’s not enough, the Treasury indexed 5-year adjustable rate plummeted by three points to average at 3.87%
Surprisingly, these rates do not have any fees included in them when you’re on the verge of obtaining the mortgage loan.
Of note is that mortgage rates, in fact, mimic the trends of the 10-year U.S. As a result of the Treasury note tumbling, investors have looked to direct their capital to safer assets in response to the recent currency crisis in Turkey. Hence, there has been a reduction in bond yields as prices have been on the steady rise.
However, for every cloud, there is a silver lining. This is especially true for borrowers as lower mortgage rates are a boon for them. In fact, it will make it easier to kickstart any housing projects in queue.
That being said, there has been minimal buying taking place for such a long time that potential buyers are simply giving up on making any new purchases.
A dying real-estate market
Sadly, the current sluggishness of the real-estate market will not be felt only by the housing sector alone. Analysts now predict that the effects will ripple through different facets of the economy, in turn hurting economic growth.
The chief economist for Fannie Mae, Mr. Doug Duncan, issued out a research note on Thursday last week that housing will continue to cripple economic growth as a result of poor motivation and performance when it comes to home-building projects, broker commissions, and home sales.
Rippling effect in the economy
Additionally, the stagnation of the housing market is also poised to adversely affect the labor market as well. In fact, data collected by consultancy firm Challenger, Gray & Christmas revealed on Thursday last week that the percentage of job seekers moving to new cities for employment opportunities recorded its lowest this year.
Indeed, only 10% of job seekers managed to relocate to different cities/ areas for work in under first six months of this year, in comparison to the 19% that did so nearly a decade ago.
According to senior vice President Daren Blomquist affiliated to Attom Data, the more Americans move to new cities in search for greener pastures, the greater the ‘halo effect’ that local economies are experiencing as a result of an increase in home sales. As a matter of fact, Blomquist sees that higher home sales activities actually plays exceptionally well for real estate agents in the locale, further improving the businesses of home stores, as well as moving companies.
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