Homebuyers Benefit From Trade War As Interest Rates Drop


One good thing to come out of the US-China trade war is lower mortgage rates, which is helping buyers and homeowners equally well. People who purchased properties during the last 2-3 years may receive major savings if they refinance their mortgage payments while people hunting for new homes may get increased spending power due to low rates. Average rates for 30-year mortgages have fallen to around 4.01% from around 4.08% before, as per the MBA report. This is the lowest it has ever been since Nov 2016.

Average rates for a 15-year mortgage are at 3.37–3.48%, which are at their lowest since Sept 2016.

Lower rates can be expected by the time the next report from MBA is due. The Fed rates cuts are along expected lines. However, the China-US trade war had the biggest influence on these rates, said Mike Fratantoni of MBA. This lead to mortgage rates dropping that is likely to increase the number of refinancing applications during the upcoming weeks. Trade tensions are on the rise, which has led to investors pouring cash into US Treasury bonds, usually regarded as safe investments, which has lowered yields. Mortgage rates are usually based on Treasury bond yields.

Fratantoni stated that refinancing volumes would only head north due to lower rates. Applications have grown 12% compared to last week, with a 116% jump in applications compared to last year, as per the report from MBA. Not just lower payments, people are even able to reduce their mortgage term periods, which is quite good. Homebuyers who received approval previously this year could qualify for more amounts, stated Scott Sheldon of NAF. People were getting more than $35,000–40,000 of spending power compared to the last few months. However, home availability is still limited. While mortgage approvals may be available, they can’t find any houses they can buy.

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