Lower mortgage rates, homeowners ‘win’ the election


Market volatility around the 2020 election drives mortgage rates down even further, helping the real estate industry to continue an already historic year. 30-year fixed rate mortgages are at 2.77%, down 0.04% last week after already historic lows. This is a 0.9% difference between the rates of a year ago. Economists attribute the change due to uncertainty surrounding the election without a clear winner late Thursday afternoon.

Some analysts expected the stock market to be volatile due to the uncertainty, but this scenario did not materialize at all. Wall Street seems to appreciate the prospect of a balance of power that could prevail after the counting of the votes. Mortgages overall declined as 15-year fixed rate mortgages hit an all-time high.

For some Americans who are still working, their 401 (k) goes up even as their mortgage payments go down. Ironically, part of the reason interest rates are low is because of unemployment, as over 750,000 people filed for unemployment last week.

Needless to say, banks and credit unions are busy with refinancing requests despite the already hot refinancing market in 2020. The industry is up over 75% year over year. Homebuyers are in the market, with the potential for a short-term real estate boom in specific markets not only because of rates but also the continued search for more workspace in the home due to the impact of Covid in the workplace.

Month after month, home sales are breaking records even in the fall with bidding wars in the suburbs. In states like Connecticut, where prices have stagnated for a decade, relocating major cities like Boston and New York is driving prices up despite the economy being hit hard by Covid.

As long as interest rates continue to fall, analysts expect November to continue to keep lenders busy even as Covid cases increase. In several markets, the pandemic has proven to be the solution to stagnant house prices and prompted first-time buyers to enter the market.


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