Mortgage Rates Fall to 2012 Lows Due to Global Economic Unrest
The month of April saw mortgage rates plummet, hitting dramatically low rates not seen since the end of 2012, when the financial crisis sent 30-year fixed mortgage rates to an all all-time low of 3.31 percent. As May began, rates rose slightly, with a 30-year fixed mortgage at 3.83 percent and a 15-year fixed mortgage at 3.05 percent. The Adjustable Rate Mortgage (ARM) benchmark is sitting at 3.76 percent.
While this is welcome news for potential buyers and homeowners looking to refinance, much of the rate drop is due to serious economic concerns on the global level. Mortgage rates are set by the market, meaning perilous drops during times of unrest. Investors wary of bad economic news from China or the deterioration of the U.S. labor market, for instance, can cause market fluctuations.
Of most concern at the moment is the United Kingdom’s scheduled referendum vote to potentially leave the Eurozone. The vote is planned for June 23 and, if the vote is to exit, then rates are expected to plummet even further.
The good news is that such market conditions tend to spur an increase in real estate activity, benefiting seller and buyers alike, as well as banks and other mortgage lending institutions. Indeed, mortgage applications rose 14 percent over the past month, while new housing construction increased by more than 18 percent.
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