After falling to a record low just two weeks ago, mortgage rates are surging higher again. This as real estate agents try to deal with a new normal in what was supposed to be a busy spring housing market.
The average rate on the 30-year fixed fell to 3.13% on March 2, the lowest ever recorded by Mortgage News Daily. That rate is now back up around 3.65%, as yields on mortgage bonds rise and lenders keep rates higher as a way to handle overwhelming refinance demand.
Applications to refinance a home loan jumped 79% last week compared with the previous week, according to the Mortgage Bankers Association. Applications for home purchase loans were up just 6% for the week.
The jump in rates comes just as real estate agents in some parts of the country cancel open houses scheduled for this weekend. Fears of the coronavirus have some sellers pulling back and some buyers taking their searches entirely online.
“At the moment we are telling our sellers that open houses are not recommended,” said Jane Fairweather, a real estate agent at Long & Foster in Bethesda, Maryland. “To keep agents and buyers safe we are choosing not to hold opens for now.”
In a quick survey, 16% of Realtors reported seeing a drop in buyer interest related to the coronavirus and 1 in 4 sellers are changing how they market their homes, some going entirely online, according to the National Association of Realtors. Just 3% of Realtors said they had clients remove their homes from the market due to the coronavirus.
As with everything in real estate, reaction is local, with some markets not seeing as much of an effect.
“While my business is still busy so far, I have heard that there are some slowdowns in other areas. It may be coming still and it just has not hit me yet though,” said Laura Barnett, a RE/MAX agent in the Dallas-Fort Worth area.
Higher-priced housing markets are likely to see more of an effect, as buyers are more influenced by moves in the stock market. The recent rout already has New York City buyers pulling back, and that is the case in other major metropolitan markets.
“The immediate effect has been to the downside, concern and fear associated with the unknown,” said Steven Cohen, an agent at Keller Williams in Boston. “Aversion to congregating at open houses and worry that asset devaluation, equity devaluation will bring the overall economy down, including the value of real estate.”
This weekend will likely be telling, as buyers decide whether or not to venture out. The nation’s homebuilders will also be watching traffic in model homes closely. A monthly sentiment index is out next week, and the National Association of Home Builders indicated it would be adding questions on the survey about potential supply chain disruptions.
The housing market is already struggling with a record low supply of homes for sale, and the fear among consumers about both their personal and financial well-being is not going to help that any. It will undoubtedly not be business as usual for spring housing.
“I will say that people are engaging in all manner of salutations except the handshake. I’m being toe-tapped, elbow tapped and bowed to,” said Cohen. “They sometimes are walking around with their mini-Purells, literally sanitizing as they mill about the properties.”