The coronavirus pandemic has slammed the residential market and left homeowners wondering if they’ll be able to make their payments, but at least rates are down, right?
The average rate for a 30-year fixed mortgage dropped to 3.5 percent from 3.65 percent last week, according to data from Freddie Mac reported by Bloomberg. Freddie Mac itself is offering various mortgage-relief packages in light of the pandemic.
Mortgage rates dropped to a record low of 3.29 percent earlier this month — not surprisingly, given that few people are applying for loans. Applications dropped by 15 percent last week, according to Bloomberg.
While statistics haven’t yet been reported, activity is way down in areas hit hardest by Covid-19, including Los Angeles and New York — two of the nation’s premier residential markets.
Both of those cities have instituted stay-at-home policies and barred large gatherings, effectively ending open houses and discouraging potential buyers from shopping. One analysis found new listings in New York City last week fell by 79% from the same period a year ago, and hundreds of homes were pulled from the market.
Last week, the Federal Reserve cut its benchmark interest rate to zero and announced it would buy at least $200 billion in mortgage-backed securities to help prop up the nation’s real estate market.
Freddie Mac Chief Economist Sam Khater said in statement that demand was softening, but that Federal Reserve’s action and a federal stimulus package awaiting approval from the House of Representatives and President Donald Trump “will provide substantial support to the mortgage markets.” [Bloomberg] — Dennis Lynch