
Mortgage Bankers Assn has recently reported a 16 percent uptick in refinancing activity as mortgage rates just hit their lowest point in 2016.
To most financial experts’ dismay, mortgage rates will not start to rise anytime soon as the U.S. central bank is now struggling not to cut interest rates, rather than attempting to hike them as promised.
Analysts and home buyers alike are confused as the global economy has defied nearly every prediction. This is why many economists are concerned over a new recession rather than full recovery.
Low interest rates are just a side-effect of the international economic slowdown. The world’s second largest economy, China, has been sending shivers down investors’ spines for months now. Analysts are concerned that China’s economic growth leveled off, while regulators in Japan and Europe are struggling to jump start the economic recovery.
Nevertheless, this grim picture has also a bright side: incredibly low interest and mortgage rates. Analysts predict that mortgage rates could soon hit a new record low. According to a Freddie Mac report, a fixed mortgage for 30 years has slipped from 4.01 to 3.62 in recent months.
But the fuzzy economic outlook sends confusion among home buyers since they can no longer find the perfect time of investing in a new home, which is often the most profitable investment to many Americans as stock market continues to rattle. This is why many other Americans are wondering whether this may be the best moment to refinance.
Analysts recommend taking advantage of the new opportunities as they pop up, rather than waiting for better opportunities. Jonathan Smoke of the Realtor.com noted that no financial expert including himself can now predict where the economy would go from here.
According to a recent report from the Mortgage Bankers Assn., the level of refinance activity skyrocketed 16 percent when mortgage rates sank to the lowest level this year. This happened in just one week this month, analysts explained, but the rates are now ‘moderated’ even though they are below any previous forecasts.
Experts noted that not only home buyers could benefit from lower interest rates. People who plan for an auto loan can also benefit. Currently, the average rate for a car loan slipped to 4.29 percent from 4.4 percent a couple of months ago, triggering record sales for the auto industry once more.
Analysts predict that record low mortgage rates could also help revive the housing market which was the worst hit by the 2008 financial crisis. So far, investors seek safer alternatives to invest in, so many of them opt for 10-year Treasury bonds, which are considered to be the safest place to invest in.
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