As the trade war with China continues without any sign of a negotiated conclusion, the OECD (Organization for Economic Cooperation and Development) has recently stated that the global economy is expected to grow only 3.2% this year, down from a previous forecast of 3.3%. They single out the trade tension as the “principal factor weighing on the world economy.”
While that is certainly not good news from a world economy perspective, it has affected U.S. mortgage rates positively. According to a report from CNBC, because of the extended trade war, investors are looking at safer buys in the bond market, causing U.S. Treasury yields to drop drastically. And because mortgage rates tend to follow that yield, they are also dropping.
According to Freddie Mac, mortgage rates fell for the fourth consecutive week, bringing fixed-rate mortgage averages to their lowest level in two months.
Rate refinances have also surged because of the lower rates. The Mortgage Bankers Association reports an 8% increase in refinances, the highest level in over a month.
It is not clear how long the trade war will continue or what long-term economic effects it will have, but for the moment, it seems to be creating a better opportunity for home purchases and refinances.
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