The collapse of Silicon Valley Bank will likely help push mortgage rates down further, experts say.
The housing market has been stuck in a rut because of high mortgage rates. The possibility of a slowdown in the U.S. Federal Reserve’s pace has offered relief, as rates edge downwards.
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The collapse of Silicon Valley Bank will likely help push mortgage rates down further, experts say.
The collapse of SVB SIVB, as well as Signature Bank SBNY is spooking investors. But with the federal government stepping in, the main outcome for the housing market may be lower mortgage rates, which will benefit U.S. home buyers, Taylor Marr, deputy chief economist at Redfin, told MarketWatch.
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A recent announcement by two of the nation’s largest banks, Silicon Valley Bank and Signature Bank, reveals that both have recently filed for bankruptcy. This news is expected to have a positive effect on the housing market, as the decline of the two banks could lead to a reduction in mortgage rates, making homes more affordable for buyers.
The news of both banks filing for bankruptcy came as a surprise to many, as they were both highly regarded in the banking industry. Silicon Valley Bank had been operating for almost 40 years and was known for its strong customer service. Signature Bank had also been running for more than two decades, providing innovative banking services for businesses, corporations, and individuals.
Though their closure was a shock, it could have a positive effect on the housing market. As both banks had been major sources of financing for mortgages, their bankruptcy could lead to a decrease in mortgage rates. This would make it easier for potential buyers to purchase a home, thus stimulating the housing market. Additionally, the filing for bankruptcy could result in a rise in property values, due to an increase in demand.
For now, the impact of Silicon Valley Bank and Signature Bank’s collapse has yet to be seen. However, economists expect it to be a beneficial development for the housing market in the long run. If the predicted decrease in mortgage rates is realized, then it could provide a much-needed boost to the housing market, making it easier for potential buyers to enter the market.
