Financial markets are preparing for a protracted trade war between President Trump’s administration and the Chinese government. It has definitely caused a stir and may have some major implications on the consumer goods market and other markets. However, the trade war and other factors has actually had positive effects on certain U.S. financial markets—including a big drop in mortgage rates.

Bond and Mortgage Markets Benefit

Investors have been rushing into the bond market, which represents a very safe investment category amid a major international trade war. In turn, this caused the yield on the U.S. 10-year Treasury to fall dramatically. The mortgage market also follows this yield loosely, which is why we recently saw a sudden, sharp drop in mortgage interest rates.

“Concerns over European economic growth and ongoing uncertainty about a trade war with China were some of the main factors that kept mortgage rates low last week,” said Joel Kan, MBA’s associate vice president of economic and industry forecasting.

Mortgage Rate Impact

The average rate on the 30-year, fixed-rate mortgage fell by 4 basis points last week and then dropped even further. Mortgage lenders have been scrambling to reprice their rate sheets and get qualified buyers locked in with the lowest interest rates we’ve seen in over a year. Some of the top-tier borrowers with great credit scores and financial situations are seeing rate quotes under 4%!

So much of home buying is about timing, especially when it comes to securing a good mortgage rate on the loan. We understand that every little bit helps. On a $300,000 mortgage, a half percentage point can mean $100 or more difference in monthly mortgage payments.

Is it Time to Act?

The longer the rates remain low (whether impacted by an ongoing trade war with China or other economic factors), the more likely home prices will rise. Real estate is a very predictable market in the sense that one change will almost always affect the other. Home buyers who have been waiting to buy will want to take advantage of today’s low rates while they can. Likewise, it is also a great time to refinance your existing mortgage with a lower rate.

When it comes to your mortgage, timing is important to get the best rates. However, it is also vital that you make the right decisions for your financial future. That’s why it helps to have a trusted advisor like the team at Transparent Mortgage on your side. We’ll look at every factor and review your financial situation to help you make the right home buying or refinancing decisions. Call us today at (858) 761-7795 or email me at JJ@tspmortgage.com

JJ De Villiers

JJ De Villiers