Mortgage interest rates have dropped by about 0.2 to 0.3 percentage points this week. Since 2004, this has only happened four times before. It normally takes several weeks for lenders to implement rate cuts, but this time some lenders responded within days. According to The Mortgage Shop, this is due to the sharp drop in demand for mortgages over the past year, as a result of which lenders compete for an ever-shrinking pool of potential customers.
Investors are fleeing to government bonds
In times of uncertainty, investors often turn to government bonds, generally considered safe investments. As a result, these debt securities increase in value, causing interest rates to fall. Two weeks ago, this also led to a decline in capital market rates, to which mortgage rates are linked.