The international spread of the coronavirus has led to economic uncertainty, volatility in the stock market and travel and other industries seeing a massive drop in customer activity.
But one area consumer demand is not waning is mortgage and refinancing options. In fact, recent economic volatility has driven down mortgage interest rates, which could actually boost homebuying activity.
On March 4, the average 30-year, fixed-rate mortgage rate was 3.29%, according to Freddie Mac, a record low for the last 50 years and down more than 1 percentage point from the same time last year. On March 12, Freddie Mac reported the average 30-year, fixed-rate mortgage rate climbed slightly to 3.36%, though it still remains nearly a full percentage point below the average rate from the same week in 2019.
A contributing factor to the drop in mortgage rates is that fact that the Federal Reserve reduced interest rates on March 3, making the target range 1% to 1.25%. On March 15, the Fed went even further and cut interest rates to zero, announcing plans to buy $700 billion in government and mortgage-related bonds in an effort to protect the economy as the coronavirus forces many people to halt their usual activities.
Mortgage interest rates are determined independently of the Fed’s target rate, but the emergency rate cuts are certainly influencing the lending industry’s offered rates.
You may feel preoccupied with concerns about your health, investments and other factors that crop up daily as the number of coronavirus cases in the U.S. grows. But this may also be a prime time to examine how your mortgage options could benefit you in the long term.
Here’s what you need to know about mortgage rates right now, and how to determine the best steps for you.
Should I Refinance My Mortgage Now?
With mortgage interest rates as low as they are, it makes sense to explore your options and see if you can secure a new interest rate that will save you more in the long run and help you to pay off other debts sooner.
However, know that you’re not the only homeowner trying to benefit. Refinancing applications increased 78.6% in the week that ended March 6 from the week prior, according to data from the Mortgage Bankers Association. That's 479% higher than the same week in 2019.
By sheer volume of interest, lenders are already overwhelmed. “There’s only so many people to work the volume that’s coming in right now,” says Nicole Rueth, producing branch manager of the Rueth Team with Fairway Independent Mortgage Corporation in Denver.
So expect long wait times on the phone or online to interact with a representative for your lender. But if refinancing will free up cash to increase your savings to pay down other, high-interest debt, it may be worth the wait. “All it costs is your time to check,” says Danielle Hale, chief economist for realtor.com.
Should I Apply for a Mortgage Now?
If you’ve been planning to buy a home and are financially prepared, now would be a great time to apply for a mortgage and lock in a low interest rate. As is the case with homeowners who are looking to refinance, however, you can expect connecting with a lender to take a bit longer.
Rueth reports that some lenders are even “tapping out.” She notes that a local credit union in the Denver area is temporarily refusing new clients, both due to a lack of personnel resources and to avoid lending too much at a low rate.
But many homebuyers will still be able to secure a mortgage or refinance, and the spring homebuying season is expected to remain competitive in many markets throughout the U.S.
“So far we haven’t seen any evidence of buyers changing their plans or interests, and low mortgage rates are going to help bring some buyers in who otherwise might not have bought a home this year,” Hale says.
While a boom of refinancing may encourage more homeowners to stay in their homes longer, which would contribute to a shortage of available housing inventory, some may see this as an opportunity to put their house on the market. “If they’re feeling confident, then absolutely they’ll move up to that bigger home – if they can find it,” says Odeta Kushi, deputy chief economist for First American Financial Corporation, which provides title insurance and risk solutions services for real estate transactions.
[Read: The Guide to Buying a Home.]
How Long Will This Period of Low Mortgage Rates Last?
Already, the wave of mortgage and refinance applications has led many lenders to raise interest rates at least somewhat, although they remain low overall. The Fed's move to cut interest rates again on March 15 will likely reflect in a brief period of historically low rates. Still, lenders can’t sustain their businesses at such low rates. “It’s not natural for banks to loan 30-year mortgages at 2.99%,” Rueth says.
However, that doesn’t mean mortgage rates will shoot up anytime soon. “It’s going to require other economic factors for mortgage rates to go higher in a big way,” Hale says. Even if the stock market were to stabilize and the coronavirus all but disappear, there’s no expectation that mortgage rates will make affording a home significantly harder.
For comparison to today's 3.36% average rate for 30-year, fixed-rate mortgages, on March 14, 2019, the average 30-year mortgage rate was 4.31%, according to Freddie Mac. Looking even further back, mortgage rates peaked in 1981 at more than 18%. Economists and real estate professionals agree that mortgage rates will likely stay lower in 2020 than last year.
“Once some of the economic instability starts to settle down, the general consensus … is that rates will remain below 4%,” Kushi says.
How Will Coronavirus and Low Mortgage Rates Affect the Housing Market?
Going into spring, there’s no indication yet that coronavirus fears will negatively affect the U.S. housing market. If anything, low interest rates could help drive more homebuyer interest, which in some places may lead to an increase in bidding wars and decrease in the average number of days a house is for sale before it receives a compelling offer.
Compared with the stock market, real estate is an industry of slow-moving assets. In other words, you don’t see the same daily peaks and dips that you do with stock trading, which makes the real estate market more stable during an otherwise volatile time.
Parts of the U.S. significantly affected by the coronavirus will likely see brief pauses in homebuyer and seller activity, although those areas currently appear to be very small. For example, New York Gov. Andrew Cuomo announced on March 10 that part of New Rochelle, New York, has been turned into a "containment area" in an attempt to stop the spread of COVID-19 after more than 100 area residents tested positive for the virus. It's reasonable to expect house hunting and real estate transactions to slow, if not stop, in this area during the containment period.
“There may be localized demand shocks in areas that are most affected by the spread of the virus,” Kushi says. However, any containment or even a hypothetical citywide quarantine wouldn’t be indefinite; the New Rochelle containment is currently scheduled to end March 25.
Browse for homes – and maybe even close a deal.
Luckily for homebuyers, house hunting apps are growing in number and sophistication. As the online real estate marketing industry becomes more competitive, mobile apps are getting better at helping consumers find accurate housing information while offering features to help users narrow down their search. Read on for some of the most popular and helpful apps to use when searching for your next house. All apps are available on both iOS and Android.
Updated on Nov. 6, 2019: This slideshow was published at an earlier date and has been updated with new information.Zillow
(Courtesy of Zillow)
This is the most downloaded real estate app for both Apple and Android phones, and it includes Zillow's signature map and home value estimate tools. With more than 100 million homes in its database, Zillow's app is the most popular method for users to explore the platform. In fact, Zillow reports that more than two-thirds of its usage takes place on a mobile device, jumping to more than three-quarters on the weekends.
Best feature: The app’s dashboard includes a Your Home tab that allows you to store your property’s information and see how its value estimate changes over time.
Pro: You have the option to filter your saved searches by property listings that have recently changed, so you don’t have to scroll far to see if a house's asking price dropped.
Con: As much as you may want it to be, the Zillow Zestimate isn’t a guarantee of what your home will sell for.Realtor.com Real Estate Search
Realtor.com Real Estate Search
(Courtesy of Realtor.com)
Filters on this app's search function allow you to include specific details on your must-have list, such as multiple floors, a fireplace, central air and even community swimming pools or security features.
Best feature: With the Sign Snap feature, you can take a photo of a real estate sign you see in a neighborhood and get details about the property right away.
Pro: You have the option to connect with a real estate agent who can represent you as the buyer in a deal, but you can also see the contact information of the listing agent if you want to talk to him or her directly.
Con: The more specific filters rely on listing agents using the right keywords, so if you’re struggling to find everything you want in a house, you may have to widen your search and keep an eye out for details in listing photos.Trulia
Trulia’s app gives users a desktop-like experience in a mobile platform, with a focus on design that makes it easy to use.
Best feature: Trulia polls its online users who live in specific neighborhoods and includes the results on the app. For example, you might find that 93% of one neighborhood's respondents feel comfortable walking alone at night or that 76% say kids play outside regularly.
Pros: On each property profile, Trulia lists local legal protections, noting whether there is legislation in the area to protect against discrimination for gender identity or sexual orientation in employment, housing or public accommodations.
Cons: On any property profile, you’re prompted to call or email an agent about the property. While this is convenient if you’re serious about buying but don’t have an agent, it can get in the way if you’re just browsing.Redfin Real Estate
Redfin Real Estate
Since Redfin utilizes an out-of-the-box business model with agents and professionals specializing in different steps of the homebuying and selling process, the company’s app serves as a way for users and Redfin agents to communicate. A map indicates which properties are listed by Redfin or another broker and also notes homes that are likely to sell fast through its Hot Homes feature.
Best feature: You can schedule a tour with a Redfin agent directly through the app. The app even lists the next available tour time.
Pro: You can click the heart symbol to keep a property you like on your radar, and you can also nix properties so they don’t keep popping up in searches.
Con: If you don’t live in one of the 80 markets where Redfin has agents, the app offers local listing information pulled from the MLS, but you won't be able to utilize the features that connect you with Redfin agents.Homesnap Real Estate & Rentals
Homesnap Real Estate & Rentals
(Courtesy of Homesnap)
Homesnap gives house hunters the reins with this app. A signature feature allows users to take a photo of a home, and the app will identify the property and provide details about it from the local multiple listing service or public records.
Best feature: The beginning of each property profile details the property history, including previous sale prices and when it last went on market.
Pro: Each home has a section that allows you to determine your commute route and time and see both map and street views of the property.
Con: The property details are in list form, which you can expand to see everything from the home's architectural style to number of bathrooms and homeowners association fees. The depth of information is helpful, but long lists can make it easy to lose focus and miss key criteria.Homes.com
On this app, you can search based on your needs and desires, including buying versus renting, home value information for properties on the market and what neighborhoods are ideal based on your preferred commute time.
Best feature: An exclamation point in the corner of a property profile lets you know that it’s a new listing, which can help you move quickly to avoid competition with other buyers.
Pro: If you'd like to get in touch with a local agent, the bottom of a property's profile often lists more than one option, making it easier for you to shop around for the right agent.
Con: While Homes.com has much of the same property information as other house hunting platforms, the app doesn't offer much in the way of neighborhood information.Estately Real Estate
Estately Real Estate
Estately aims to connect consumers with the right local real estate agent, and its app offers multiple ways to get in touch with agents.
Best feature: Users can click on icons on property profiles for quick information on taxes, utilities, appliances, schools and more. Profiles also include scores on things like area noise pollution and internet speed – details that aren’t always considered but could be deal-breakers.
Pro: The app encourages you to see houses in person, with multiple opportunities on a property profile to schedule a day and time to visit.
Con: Estately only covers markets in 40 states, so those looking for homes in Arkansas, Iowa, Kentucky and several others are out of luck.Century 21 Local
Century 21 Local
(Courtesy of Century 21)
A longstanding national brokerage, Century 21 provides consumers with access to home listing information pulled from the local multiple listing services. The app can particularly come in handy if you plan to use a Century 21 agent, as that’s who you'll be in touch with if you would like to inquire more about a property.
Best feature: The app provides a notes section for every property, so you can keep track of your impressions as you compare homes.
Pro: If you start searching for homes in a different city, information about the local Century 21 brokerage you should contact changes accordingly, although you can still see listings from brokerages outside Century 21.
Con: This app pulls from Zillow to provide home value estimates, but occasionally lists "unavailable" even if the property has a Zestimate available on Zillow.The best apps for house hunting include:
The best apps for house hunting include:
- Realtor.com Real Estate Search.
- Redfin Real Estate.
- Homesnap Real Estate & Rentals.
- Estately Real Estate.
- Century 21 Local.
Updated on March 16, 2020: This story was published at an earlier date and has been updated with new information.
She has appeared in media interviews across the U.S. including National Public Radio, WTOP (Washington, D.C.) and KOH (Reno, Nevada) and various print publications, as well as having served on panels discussing real estate development, city planning policy and homebuilding.
Previously, she served as a researcher of commercial real estate transactions and information, and is currently a member of the National Association of Real Estate Editors. Thorsby studied Political Science at the University of Michigan, where she also served as a news reporter and editor for the student newspaper The Michigan Daily. Follow her on Twitter or write to her at firstname.lastname@example.org.