In the coming months, the markets will be on watch for any further positive developments in the U.S. economy as many states have reopened. The path of borrowing costs will be dependent on what course the recovery takes, given that virus cases have spiked in recent weeks.
A negative scenario surrounding the virus would have a positive impact on rates, with the opposite also being true. However, Fed Chair Powell has vowed to use all of the Fed’s tools at the bank’s disposal to ensure that the economy continues on its course to greener pastures while interest rates remain low to spur on the economy.
Mortgage Market Guide expects to see third quarter 2020 Gross Domestic Product rebound strong, by 15%-20%. This will be due in part to more Americans getting back to work — as evidenced by recent strong labor market reports — and the recent pick-up in overall economic indicators.
Housing should continue to be a bright spot in the U.S. economy. The one downside we see for potential homebuyers is the lack of affordable homes on the market for sale as inventories have been running below normal levels.
In its latest Existing Home Sales report, the National Association of REALTORS© reports that unsold housing inventories are down 18% from last year and that significantly low inventory was a problem even before the pandemic. Such circumstances can lead to inflated costs.
Bottom line: Thanks to the policy response by the Fed, Stocks are near all-time highs and rates are at all-time lows. Therefore, would-be homeowners are wealthier and have an opportunity to buy a home for less money or possibly even a larger home. We also think home builders will continue to ramp up construction and help fill the inventory gap to some degree. If you have the means and ability to purchase or refinance a home, the time is now.
Source: Mortgage Market Guide
I’ll continue to monitor economic reports closely, but if you have any immediate questions, please call or email today.
We are ready to help you find the best possible mortgage solution for your situation. Contact Sheila Siegel at Synergy Financial Group today.
