This is certainly a time of uncertainty as both personal and economic life have suffered major upheavals. But a couple of things remain pretty certain throughout all this. The stock market is as volatile as ever with its recent dramatic fall. Interest rates look to remain low, which is good news for home buyers. But what, exactly, will happen to interest rates in 2020 for Babylon and Surrounding Areas home buyers?
Early 2020 Drop in Interest Rates
As everyone probably now knows, in an effort to prop up the economy, the Fed cut interest rates in February in the face of the Coronavirus pandemic. The Fed cut rates again in March, bringing interest rates to near historic lows. The forecast for April seems to be that mortgage rates will fall below March’s levels to somewhere around 3.5%or lower for 30-year mortgages.
So let’s examine why and what lies beyond . . .
Early 2020 Interest Rates Climate
Here’s how things looked early this year with respect to interest rates: The “the 30-year fixed-rate mortgage averaged 3.373% APR on Feb. 28. It moved upward, but lingered below 3.5% for a week and a half. It rose on March 10, and reached the month’s high of 4.113% on March 20. That was a jump of about three-quarters of a percentage point in just three weeks.”
That rise in rates was mostly attributable to upheaval in the bond market and lenders having to deal with late February’s surge in refinance applications. Raising mortgage rates was a way to slow applications in order to handle the influx already on their hands.
Current Interest Rates in 2020
However, interest rates are now lower because the Fed cut interest rates again in March, and that cut is now reflected in the current mortgage interest rates.
“On Friday, April 3, 2020,” market watchers noted, “the average rate on a 30-year fixed-rate mortgage fell 17 basis points to 3.43%, the average rate on the 15-year fixed-rate mortgage fell 21 basis points to 2.943% and the average rate on the 5/1 ARM dropped five basis points to 3.519% . . . A basis point is one one-hundredth of one percent. Rates are expressed as annual percentage rate, or APR. The 30-year fixed-rate mortgage is one basis point lower than a week ago and 90 basis points lower than a year ago.”
Right now, the rate for a 30-year fixed-rate mortgage is averaging right around 3.523%, which is uncommonly low. As a result, despite rising unemployment and economic uncertainty, many people interested in purchasing a Babylon and Surrounding Areas are applying for mortgages. Why? Because with interest rates this low, it’s a great time to buy a house. At the same time, though – and buyers need to take this into account – rates, while low, are still fluctuating. The reasons for this include:
- Jumps in unemployment
- School and business closures
- Continuing increases in mortgage and refinance applications
- Reluctance among lenders to buy jumbo mortgages
The upshot of all this, the financial experts say that applying for a mortgage these days requires persistence and patience because rates jump around. If you are actively shopping for a mortgage, you should check lenders’ rates at least once a day. Because of the variation in rates among lenders it is strongly advised that you comparison shop.
Interest Rates in 2020 Going Forward for Babylon and Surrounding Areas Home Buyers
Although interest rates are currently low, they have been on a roller coaster without much predictability. So what lies ahead for Babylon and Surrounding Areas home buyers?
As mentioned before, in just a few short months, rates hit new lows, lenders became overwhelmed, and responded by raising mortgage rates. Because of this, the Fed took countermeasures…(“In response, the Federal Reserve has employed quantitative easing, or QE, by injecting billions into the MBS market, to ensure that mortgage rates stay low. The Fed has written a blank check, promising to buy billions in agency MBS, which come from Ginnie Mae, Fannie Mae and Freddie Mac. Experts say this move will help put mortgage rates back into balance, helping to push them into the low 3 percent range during Q2.”)
In addition, because the Federal Open Market Committee has implemented policies to “ensure the continuation of economic activity and market liquidity, mortgage rates are likely to reach new lows in the coming weeks and months.” Financial markets are suffering stress and the economic outlook remains uncertain, but, market watchers still say, we should expect “rates on 30-year fixed-rate mortgage[s] to hover around 3 percent or fall lower” throughout the rest of 2020.
Now’s the Time to Buy
If you’re planning to by a home in Babylon and Surrounding Areas.