Good news for economy, bad news for rates
Pfizer’s announcement on Monday marks an early step on the long road to approving, and eventually distributing, a vaccine.
Though there's a lot of work to be done, investors pounced on the news anyway.
Markets rallied, with the Dow Jones Industrial Average climbing more than 800 points. The optimism on Wall Street also pushed the yield on the 10-year Treasury note to its highest level since March.
“[The] encouraging vaccine news and more certainty surrounding the outcome of U.S. elections combined to push bond yields strongly upward, and mortgage rates followed suit,” says Matthew Speakman, an economist with Zillow.
The average for a 30-year fixed-rate mortgage rose Monday and Tuesday and is now at 3.01%, according to Mortgage News Daily’s survey of lenders. That’s after rates settled at an average 2.89% on Friday, ahead of the Pfizer news.
Last week, a different, weekly survey from mortgage giant Freddie Mac put the rates on home loans at record lows for the 12th time since the pandemic began.
Virus will continue to stifle rebound
Rates had been sinking while investors tensely awaited the outcome of the presidential election, which was called for Joe Biden on Saturday.
But though they've gone up this week, mortgage rates are still at levels that would have seemed unbelievable not long ago. Last year at this time, 30-year rates were averaging a steeper 3.86%, Mortgage News Daily says.
And don’t expect the economy to get back to normal just yet — which means the Federal Reserve is likely to keep supporting ultra-low mortgage rates.
Big portions of the economy (think: entertainment, leisure and hospitality) won’t recover until the virus has been properly corralled, says Zillow’s Speakman.
Meanwhile, higher mortgage rates and Pfizer’s promising vaccine are squeezing the stocks of some of the largest homebuilders.
That’s because an effective vaccine could curb the current stay-at-home culture, along with the recent appetite for homes in the suburbs, away from crowded cities.
Take advantage before rates climb higher
Even as coronavirus cases in the U.S. surge, Monday’s announcement gives hope for an eventual return to normalcy.
But there’s still time to lock in the best mortgage rates before they rocket higher on further good vaccine news.
Some 18.5 million mortgage holders are in a prime position to refi and save around $300 monthly, the mortgage data firm Black Knight said last week. The researchers add that 2.5 million could even save $500 or more every month by refinancing.
Whether you're refinancing or buying a home, compare at least five rate quotes to find the best deal, because mortgage offers can vary widely from one lender to the next.
If you do miss out on rock-bottom rates, you’ll need to look for savings elsewhere. You can use your comparison shopping skills when you buy or renew your homeowners insurance, so you’ll get the lowest possible price for the coverage you need.