Across the globe, the Coronavirus has created a staggering effect on different segments of the economy.
Due to the pandemic--interest rates, bond yields, and real estate have all undergone a massive change within the past three months.
A year ago, mortgage rates were flying securely above 4.0%. However, since March 3rd, the federal reserve has implemented a multitude of different strategies to “keep money flowing through the financial system” causing a chain reaction that has resulted in the cut of interest rates (Lewis "What the New Coronavirus Means for Your Home Loan and Mortgage Rates" 2020).
According to Mortgage News Daily, the interest rates have fallen to a record low of 3.09% (DianaOlick "Mortgage rates just hit another record low" 2020).
In addition to the interest rates reaching their all-time low, bond yields have cohesively followed. As the Federal Reserve reduces the interest rates at which banks borrow money, the rates for bond yields decrease. Therefore, causing most investors to see a negative return.
The low-interest rates that have fruited from the pandemic also have had an interesting effect on the real estate market. While the interest rates continue to fall, more consumers consider purchasing properties. Which in result, increases the demand and prices in the real estate market.
The pandemic has ultimately caused significant changes within multiple sectors of the economy. Interest rates, bonds, and real estate have all taken on a startling change during COVID-19 and may continue to see more change as the pandemic continues.
Author: Ethan Nguyen