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What does the collapse of mortgage interest rate mean for real estate in San Diego?

Lower lending rates may make it easier for some home buyers to get San Diego homes

Concerns about the coronavirus have hit U.S. stocks, while mortgage rates have plummeted in recent days, making it easier to buy homes in the expensive San Diego market.

The interest rate on a 30-year fixed rate mortgage is 3.19%. This is the lowest level since Freddie started recording house prices in 1972.

Lower house prices have reduced the monthly cost of median priced homes in San Diego County (from $585000 in January) by about $367 from nearly 4.56% a year ago.

Concerns about the coronavirus have indirectly lowered interest rates, with the Federal Reserve cutting key benchmark rates this week. Both are likely to continue to lower interest rates. But what this means for San Diego’s already hot real estate market is unclear.

‘lower interest rates make housing cheaper every month, but that doesn’t always mean it’s the best time to buy,’ says Alan gin, an economist at the University of San Diego. The slowdown is likely to lead to lower prices in the coming months, he said.

“If the economy slows, and I think it will, it could weaken the real estate market,” he said He pointed out that he did not think there would be a full recession.

Choosing the best time to buy is not easy. For example, even if mortgage rates are lower than a year ago, San Diego County’s median has increased by 7.9% in a year.

Even if mortgage rates fall, the actual monthly cost of San Diego homes may not change, says gin.

But some buyers may see it as an opportunity. Samantha O’Brien, a real estate agent at porch light, a university highland, says many potential buyers are increasingly willing to start buying.

“A lot of clients who have consulted me for a while are really positive now,” she said “These rates are absolutely crazy.”

O’Brien said she was working with many potential buyers who were waiting for prices to fall, but that didn’t happen. Now, many people use low mortgage rates as a reason to buy.

Concerns about coronavirus have become the main reason for the decline in US Treasury yields. Mortgage interest rates follow the yield of mortgage-backed securities. These bonds usually track the yield of us 10-year Treasury bonds.

If investors put more money into the stock market instead of bonds, it could mean that interest rates will rise again.

Another factor in the real estate market may be that some people are afraid to buy things because of the coronavirus. But mark Goldman, a real estate analyst at C2 Financial Corp., said even the virus would not change the fundamentals of the market.

“We have a serious housing shortage,” he said “At the end of the day, the trend in San Diego is that more and more people have more money to pursue less housing. That will push up the price. “

The association of great Santiago Realtors said 4186 homes were on sale in January, down from 5884 in the same period last year.

Matthew Shafer, a senior mortgage adviser at the San Diego branch of U.S. financial company, said most of his business (about 90%) has been refinancing loans in the past two months. The lack of home sales means there are few loans to buy, he said.

He said he provided $4.7 million in loans in January, up from $1.8 million in the same period last year, and $3.8 million in loans in February, up from $2.1 million in the same period last year.

Lower interest rates have led to a 26% weekly increase in refinancing applications. It is 224% higher than the previous year.

In fact, applications for purchases are down 3% a week, but up 10% a year.

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