Low Mortgage Rates Will Spur Refinancing Not Buying, Trulia Economist McLaughlin Says
NEW YORK (TheStreet) -- The current average 30-year mortgage rate on a home is between 3.4% to 3.5%, the lowest its been since 2013, Trulia Chief Economist Ralph McLaughlin told CNBC's Michelle Caruso-Cabrera on "Power Lunch" Friday.
The average popular 30-year fixed mortgage rate dropped 0.25% in 10 days due to last week's Brexit, which initially put pressure on markets worldwide when the U.K. voted to leave the European Union.
The low rates even held steady when the 10-year bond yield fell, which mortgages are measured off of, Caruso-Cabrera said.
However, the impacts of the low mortgage rates are "on the financing side" rather than home-buying, according to McLaughlin.
"(Home buyers) don't really care much about mortgage rates now. They really care about finding a home because inventory is down...and saving up for a down payment," McLaughlin said.
Because housing prices have increased sharply, Americans are worried more about saving up to make a down payment on a home, he noted.
"So we think low mortgage rates are really going to spur more of an increase in refinancing, especially those that bought a home, either one or two years ago when rates were 4%," McLaughlin added.
Meanwhile, as mortgage rates hit record lows, shares of home-building stocks are on the rise. In particular, KB Home (KBH) - Get Report stock was climbing 1.58% to $15.45 this afternoon.
Separately, TheStreet Ratings rated KB as a "buy" with a score of B.
This is driven by several positive factors, which can be seen in multiple areas, such as its robust revenue growth, attractive valuation levels, growth in earnings per share and increase in net income. TheStreet Ratings feels its strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
You can view the full analysis from the report here: KBH
TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.