Mortgage rates plunge just as home prices set another record!
Mortgage rates are sinking as markets contend with the ramifications of Russia’s attack on Ukraine, and that means home prices are likely to continue surging.
The average rate on the popular 30-year fixed mortgage had risen close to a full percentage point from the start of this year up until last Friday, when it hit 4.18%, according to Mortgage News Daily. It then fell to 4.04% Monday and 3.9% on Tuesday. That is the largest two-day drop since March 2020, the start of the pandemic.
This will give homebuyers more purchasing power as the historically busy spring season kicks off. It will also keep record high home prices continuing on their run higher. Prices in January were 19.1% higher year over year, according to a report released Tuesday by CoreLogic. That level of growth is the highest in 45 years, when CoreLogic began tracking prices.
“In December and January, for-sale inventory continued to be the lowest we have seen in a generation,” said Frank Nothaft, chief economist at CoreLogic. “Buyers have continued to bid prices up for the limited supply on the market.”
Nothaft added that the rise in mortgage rates since January eroded buyer affordability, and that price growth should slow in the coming months, but that all depends on how long this drop in rates continues. It could be brief, given the other factors weighing on the mortgage market unrelated to the Ukraine crisis.
Mortgage rates loosely follow the yield of the U.S. 10-year Treasury, which on Tuesday fell to the lowest level since late January. Markets are experiencing volatility because of Russia’s invasion of Ukraine. Diana Olick CNBC