Just as mortgage applications were dropping to new lows and rates were hitting new highs, the war in Ukraine has resulted in a dip in rates that could spark another buying frenzy.
Russia’s invasion of Ukraine has caused a recent drop in mortgage rates as investors ran to the bond market and yields fell.
Mortgage rates loosely follow 10-year Treasury yields.
Average 30-year fixed rates recently hit as high as 4.18 percent, before dropping to 3.9 percent in response to the conflict.
Experts say it was the largest two-day drop since the start of the pandemic, in March 2020.
Some rate indices recorded 30-year fixed rates as low as 3.6 percent by the middle of the week, with 10-year fixed rates below 3 percent.
While this dip may help some homebuyers afford a home, it also will keep record-high home prices on their upward trend.
The average loan size recently hit a new record high of $454,400.
According to a recent CoreLogic report, home prices in January were 19.1 percent higher year over year.
Experts aren’t sure how long the rate drops will last, but some aren’t expecting it to be for long due to the other factors that contribute to mortgage rates.
In the meantime, experts encourage those who may benefit from the rate dip to reach out to a lender and ask about their options.
Refinance rates also have dropped, with 15-year fixed rates at around 3 percent and 10-year at 2.9 percent.
Those looking for a 30-year or 20-year fixed rate also have opportunities to save, as rates hit 3.9 percent and 3.4 percent, respectively.
These drops could mean the difference between hundreds to thousands of dollars over the life of a mortgage, experts say, depending on a borrower’s current rate.
Experts expect an up-tick in purchase and refinance applications while rates are lower.
Refinance applications recently reached 56 percent lower than a year ago, while purchase applications were 9 percent lower year over year.
As a result, these figures may dip over the next week but soon fluctuate once again in anticipation of Federal Reserve policy actions.
The Fed still is planning its first interest rate hike soon, with many predicting it will come this month.In the meantime, experts say this drop could be a final opportunity to get a lower rate this year, as rates are expected to steadily rise throughout the year and land at around 4.5 percent.