Why the China Trade War is Making it Easier to Buy a Home

May 28, 2019 by NASB

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 seemed to create a positive effect on U.S. mortgage rates. 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 dropping as well. 

According to Freddie Mac, mortgage rates fell for the fourth consecutive week, putting fixed-rate mortgage averages at their lowest in two months.

Rate refinances have also seen a surge because of the lower rates. The Mortgage Bankers Association reports that there has been 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 economic effects it will create long-term, but for the moment, it seems to be creating a better opportunity for home purchases and refinances.

If you would like to speak to a home mortgage professional to learn more to get a free rate quote, call us at 855-465-0753 or click here.

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