First-time home buyers, in majority millennial buyers, are in a great disadvantage in today’s housing market. Even though mortgage rates are decreasing and becoming more favorable for home buyers, housing prices are noting an evident rise, becoming less affordable. With the unemployment rate rising and the outbreak placing a halt on numerous businesses across the US and the rest of the world, buying a home may be a bit too pricey in the spring of 2020 despite the dropping mortgage rates.
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Mortgage Rates on a Historic Low in 2020
Taking a mortgage has probably never been more affordable for US citizens, however, home prices in the current market are not speaking in favor of affordability. After Treasury yield increased in the last week, mortgage rates followed with the labor market, factory orders, and the service sector. The 30-year mortgage rates increased by 3.18% at the beginning of June. Moreover, 15-year fixed mortgage rates remained the same. All reports are indicating that the economy might be heading to a slow but steady recovery.
The Economy Showing Signs of Recovery
As favorable reports continue to emerge with the beginning of June and the end of May, the economy might be heading to recovery, although modest and slow. There is upward pressure on bond yields, which is resulting in changes in mortgage rates as well. Jobs in May indicate that there is a rebound, although slight when compared to the period amidst the highest level of pandemics.
Lenders Are Changing Credit Score Requirements
To respond to the dropping mortgage rates and reduce the overall risk, lenders are changing requirements. Credit score requirements are becoming stricter, which as a result has many young and first-time buyers unable to take advantage of low mortgage rates. Combined with the rising home prices, fewer borrowers are able to tap into the potential of low mortgage rates.
