Mortgage Rates Plunge Following Russian Invasion of Ukraine
The average rate on the popular 30-year fixed-rate mortgage dropped from 4.18% last Friday to 4.04% on Monday and 3.9% on Tuesday as markets react to Russia's intensifying attack on Ukraine. The latest decline marks the largest two-day mortgage drop since the start of the pandemic in March 2020, and though it will give buyers more purchasing power ahead of a busy spring season, record high home prices will keep climbing higher, says CNBC.
January home prices were up 19.1% year-over-year, the highest level of growth in 45 years due, in part, to record low inventory pushing buyer affordability further out of reach. Though lower mortgage rates could cause a potential slowdown in the long run, current conditions may not last, and prices will likely remain elevated for the remainder of 2022.
“In December and January, for-sale inventory continued to be the lowest we have seen in a generation,” said Frank Nothaft, chief economist at CoreLogic. “Buyers have continued to bid prices up for the limited supply on the market.”
Nothaft added that the rise in mortgage rates since January eroded buyer affordability, and that price growth should slow in the coming months, but that all depends on how long this drop in rates continues. It could be brief, given the other factors weighing on the mortgage market unrelated to the Ukraine crisis.