The recent failure of SVB Financial Group sent ripples through the mortgage and housing industry. That event caused mortgage rates to plummet, and the effects can still be seen in the housing market today.
Mortgage rates are one of the most important factors in the housing market and directly affect both buyers and sellers. Mortgage rates help guide buyers in deciding whether to pursue a loan and whether that loan will be affordable. They also guide sellers in deciding how quickly they will be able to sell their properties. Low mortgage rates can lead to an increase in buyers which can drive up the prices of properties and, conversely, high mortgage rates can prevent buyers from entering the market, controlling rising prices.
So when SVB Financial Group failed, it caused the US Treasury yield to drop and, consequently, mortgage rates to drop as well. Giving buyers an incentive to jump into the housing market. Unfortunately, this weekend saw an additional decline in the 10-year Treasury yield and an even more significant decline in mortgage rates, hinting that the mortgage market is still feeling the effects of the recent SVB failure.
However, despite the decline in mortgage rates, the housing market remains relatively stable with the National Association of Realtors reporting that pre-existing home sales rose in June. This indicates that, while low mortgage rates may have incentivized buyers, it is simply the strong market conditions that are driving sales. Ultimately, the effects of the SVB failure may have been felt by the mortgage and housing industry, but the housing market is still strong and not likely to see a drastic decline in sales any time soon.
You can read this full article at: https://www.housingwire.com/articles/housing-market-tracker-mortgage-rates-fall-after-svb-failure/(subscription required)
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