Another interesting month in Greater Phoenix real estate. Just when we thought we might have seen all the surprises we could, the oil price war between OPEC and Russia took a back seat to the Coronavirus pandemic. In March 2020, the median home price continues to climb and is up 12.9% from last year, at $299,900. Inventory is 10,992 homes for sale and down 42.9% from last year.
Current 30-year money, as of March 12, stands at 3.36% with .7 points (Freddie Mac, March 12, 2020), however, rates are expected to remain highly volatile over the next few weeks as the Fed responds to the Coronavirus economy. This means rates will be unpredictable, at least in the short term. Here is a bit of a primer from “Marketwatch.com” on the relationship between the Fed Funds Rate and mortgage rates.
The Fed announced late Sunday that it was cutting its benchmark federal funds rate by 1% to a range of 0% to 0.25%, alongside other measures meant to stimulate the nation’s economy as it takes a major hit from the coronavirus pandemic.
In and of itself, the Fed’s rate cut won’t cause mortgage rates to fall. Because mortgages are long-term loans, their interest rates tend to track long-term bond yields rather than short-term interest rates such as the federal funds rate. The yields on the 10-year Treasury note BX:TMUBMUSD10Y and the 30-year Treasury note BX:TMUBMUSD30Y both fell in reaction to the stock market declines as investors fled for these government bonds, which are seen as safe havens.
The ongoing turmoil caused by the COVID-19 outbreak, which had sickened nearly 175,000 people and caused 6,705 deaths as of Monday, has sent mortgage rates lower, to be sure. Nearly two weeks ago, mortgage rates hit a record low on average, according to Freddie Mac.
In the week after that though, interest rates on home loans rebounded slightly as lenders moved rates up to deal with a major influx of refinance applications and to hedge for the potential that bond yields could rise were the coronavirus situation to improve. Marketwatch.com
What does all this mean for us? Expect rates to remain volatile for some time until the impact of the Coronavirus is better understood.
These are unusual times, and how far this all goes and where it ends is still unclear. What is clearer is that, for the foreseeable future, we are heading into a period of fluctuating, albeit still historically low, mortgage interest rates.So far, the impact on the selling and buying psychology is low. The market has yet to show significant change in either price trends or sales volume. However, these are truly unique times. If you are selling or buying right now, please get all the expert advice you can. Find a REALTOR® and a loan officer/banker that you trust and consult with them often!