Rates started dropping in early-2019 and have held very low throughout the year.Rates are in the sub-4% range according to Freddie Mac, which was unthinkably low just a few years ago.Comparing to one year ago, mortgage consumers are saving 5 per month on a 30-year fixed, 0,000 mortgage. If you’re waiting for lower rates later in 2020, here’s news for you: ultra-low rates are already here.January could be a wild ride for mortgage rates. Market-moving news will leave rates different than they were in December.
The only question is, will they be more or less advantageous for mortgage shoppers? Forecasts for 2020 say rates will average around 3.7%. However, that doesn’t tell you how high or low rates could go throughout the year.Rates could be 4% for six months and 3.4% for the next six months and you still get an average of 3.7%. But when you lock matters a lot. Rates are hovering near 3.7% now according to Freddie Mac data, so it’s an excellent time to lock in and eliminate the risk of higher rates later.President Trump recently became just the third U.S. president to be impeached.
However, that doesn’t mean removal from office. His case goes before the Senate where it is likely to be dismissed. Stil, many are wondering what the impeachment means for the economy and mortgage rates specifically.
The answer: it may not be as important as you think.According to Bankrate, the stock market pretty much did what it was going to do amidst the Nixon and Clinton impeachment worries. We might expect “business as usual” from mortgage rates as well. In the Nixon era, from 1973 to 1975, stocks plummeted, but it wasn’t necessarily due to Nixon’s Watergate scandal or ensuing resignation (he resigned before he could be impeached). Skyrocketing oil prices pushed the U.S. into recession and that’s why stocks performed poorly.
Typically, mortgage rates drop when the economy falters, but in this case, rates jumped. They went from around 7.5% in early 1973 to near 9% in late 1975 (the basic timeframe of the Nixon scandal).This was an inflation-induced recession, and rates do horribly in high-inflation settings. So that explains the odd behavior of rates — rising during a recession — rates usually fall during recession as we saw during the last downturn. Fast forward 25 years from the days of bell-bottoms and disco music. How did stocks and mortgage rates do during Bill Clinton’s impeachment in the late ’90s? (Clinton was officially impeached then acquitted in the Senate).
Stocks did drop for about a month in late 1998 as impeachment proceedings developed. But they quickly rose again to new highs, even before Clinton’s acquittal in February 1999. Mortgage rates were surprisingly tame. The 30-year fixed mortgage fell slightly from around 7% in mid-1998 to the high 6s in early 1999 when the impeachment drama officially ended. Rates dropped to a “low” of 6.49% the week of October 9, 1998, which corresponds to the official start of the impeachment inquiry on October 5. But rates zoomed back to near 7% a week later.If history is our guide, we may see a very temporary reduction in mortgage rates — maybe for just for a day or two — if Trump’s impeachment holds up in the Senate.
But markets will soon ingest the news and focus on the broader world economy. Luckily, the destinies of millions of home buyers and refinance candidates doesn’t depend too much on Trump’s impeachment status.Top Searches - Trending Searches - New Articles - Top Articles - Trending Articles - Featured Articles - Top Members
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