According to Bloomberg News, mortgage rates in the United States dropped as markets across the globe dwindled as Russia continued to strike Ukraine.
What’s the whole story?
For a 30-year old loan, the average was 3.76%, down from 3.89% in the last week, as stated by Freddie Mac in a statement on Thursday.
This was the second straight drop for the rates, keeping a tab on yields from the 10-year Treasuries, which slid this week to the lowest since January. The war in Ukraine has sent the financial markets into turmoil and given rise to a tendency to take refuge in safer assets like US government bonds.
This drop has hopefully given some respite to the prospective home-buyers following weeks of mortgage rates that have been rising. The double burden of the rising cost of borrowing coupled with the rise in home prices has driven many Americans away from buying a new home and out of the housing market.
Bloomberg News also reports that the rise in rates over six months has led to the slowdown of the mortgage business. Loan originations during the fourth quarter were seen to plunge 13% from one year earlier, which was driven by a drop in refinancing, as per Attom Data Solutions.
The volatile condition of the global markets is expected to remain low, at least for the short term, as per Joel Kan, the associate vice president, economic and industry forecasting for Mortgage Bankers Association. He stated that it is likely that the borrowing costs will increase later in the year, given the Federal Reserve’s benchmark hike and persistent inflation rates. It is not possible to forecast the course of the financial markets under the impact of the war.
