The deadly coronavirus outbreak in China that has spread to other countries is starting to have an impact on mortgage rates, with U.S. Treasuries falling to their lowest levels since October.
Investors are retreating to safe-haven asset classes amid an uptick in reported cases around the world, which could send mortgage rates even lower than the current rate of 3.77 percent, according to Bankrate’s national survey of mortgage lenders.
The 10-year Treasury yield, which is closely tied to mortgage rates, fell 7 basis points Monday to 1.61 percent, according to Bloomberg. Stocks retreated as well, with the Dow Jones Industrial Average plunging more than 400 points Monday morning.
Although the World Health Organization did not sound the alarm by naming the virus a public health emergency last week, investors are still on edge.
“Nervous markets are often good news for mortgage rates, and the current nervousness about coronavirus is no exception,” says Greg McBride, CFA, Bankrate chief financial analyst. “Market concerns about the possible economic impact of the virus are driving bond yields and mortgage rates lower.”
Homebuyers and refinancers, currently enjoying historically low rates, will likely see even lower rates in the coming weeks. Black Knight data shows that the mortgages of some 7.8 million Americans, with the current 3.77 percent average interest rate for a 30-year fixed-rate mortgage, according to Bankrate’s national survey of mortgage lenders, are refinance eligible.
“A good refinancing opportunity is now even better. But there’s no telling how long this persists. Sentiment-driven moves are very susceptible to what is in the headlines,” McBride says.
What borrowers should do
If you’re currently shopping for a mortgage, experts warn against trying to time the market. Although signs point to lower mortgage rates, tides could turn, so there’s no guarantee that you’ll get a better deal tomorrow than what you can lock in today.
One of the best ways to secure the cheapest loan possible is to shop around for lenders with competitive rates.
Keep in mind, your credit profile also has a major impact on the interest rate you’ll qualify for, so make sure your FICO score and debt-to-income ratio are optimal to secure the lowest rate.
By Natalie Campisi, Bankrate.com. Visit Bankrate online at bankrate.com.