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    How Will the COVID-19 Impact the Purchase of Your Home?

    Every industry has seen the adverse effects of the trending Coronavirus. The mortgage industry isn’t exempt. Chances are that the world returns to normal. From SARS to Bird Flu to Ebola, it seems there is always some type of health-scare that we are told will alter the course of our existence.

    Hopefully, a few years from now we are able to put coronavirus into the category of other “close calls”. But this one feels different. And it is already altering our lifestyle in dramatic ways that prior health scares did not. While the real estate industry as a whole appears (at least so far) to not be affected to the same degree as the travel and entertainment industries, what impact can we expect the coronavirus to have on the real estate industry over the course of the next few months and years? Across the globe, consumers are keeping a close eye on the coronavirus outbreak, which seems to infect more people every week. As with any global event, Wall Street is closely monitoring the progress of the virus, as well. With so many essential products being made in China – where the virus has hit hardest – financial experts are justifiably concerned that the global economy will see an impact.

    Like the rest of the financial world, the mortgage market has also been affected by the coronavirus. Bond yields and mortgage rates have both seen a drop in recent days, with mortgage rates hitting their lowest point in more than three years. With that being said, let’s take a deeper look at how the coronavirus can affect your finances.

    Mortgage Rates and Global Crisis

    Experienced investors closely monitor the news, paying particular attention to anything that might cause fluctuations in the market. Considering China’s share of the economy has increased to 19.3%, events that disrupt the industry in the country create a ripple effect.

    That ripple effect has made its way to the States, where investors are reportedly retreating to safe-haven assets. The Dow Jones Industrial Average took a significant hit, but most notable was the drop in the 10-year Treasury yield, which is closely tied to mortgage rates.

    However, whether the mortgage rate continues to drop depends on what happens in the coming days and weeks. If the outbreak is contained and the number of reported cases remains steady, investors may regain confidence in the market and rates may head in an upward fashion.

    Falling interest rates and your mortgage

    Maybe you’ve been thinking about buying a home. Maybe you love your existing home, but a lower monthly payment would be nice. Either way, variations in interest rates can make a big difference.

    If you time your purchase or refinance right, you can save significantly. But even sellers can see a big difference based on what the interest rates are when they sell.

    Conclusion

    The question now for the market is how much the COVID-19 pandemic will hurt the country’s economy and real estate market. Studies based on previous widespread illness outbreaks have shown that the real estate industry has historically rebounded fairly well in areas that were hard hit. Much will depend on how quickly those who lost their jobs or income as a result of the coronavirus pandemic can recover.

     

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