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.The collapse of SVB SIVB , as well as Signature Bank SBNY is spooking investors.
Previously, such concerns resulted in long-term bond yields falling sharply, much like they did on Monday. As of Monday 2:30 p.m. eastern time, the 10-year TMUBMUSD10Y was trading below 3.6%. And in fact, the typical home buyer may actually find good deals with their mortgages, if they shop around, Marr said.
‘A substantial positive for the housing market’ While the housing markets in the West — such as in San Francisco and the Bay Area — are struggling with home prices, the bank failures aren’t going to lead to a meltdown in housing, such as in 2008, experts said. Back then, the recession was sparked by subprime lending and a foreclosure crisis.
“The direct impact on the housing market is likely to be small. Moreover, SVB’s holdings of residential mortgage-backed securities account for a very small share of the overall market, so the forced selling of those assets is unlikely to put any downward pressure on MBS prices,” he added.