Mortgage interest rates continue to increase as these instruments diverge from U.S. Treasury in the face of unprecedented uncertainty due to the biological shock to the global economy induced by the coronavirus. Economic data is meaningless at the moment as the sole focus remains on viral infection rates and whether and how quickly the U.S. can flatten the curve on the number of people infected.
China and South Korea are showing real promise as the number of infections has subsided. Our hope is that the devastation we are witnessing in Italy is not repeated in our big cities here in the U.S. Both California and New York have paused their economies to help suppress the spread of the virus. We prefer to be optimistic that these drastic measures will work, but only time will tell.
With the government and Federal Reserve pumping unprecedented funding at this problem, we believe that our economy will recover and that the probability of the world seeing its first global depression of the 21st-century remains unlikely. However, significant economic pain is assured, and the recovery will not be without cost. We expect to see unemployment rates skyrocket and many businesses fail.
On the mortgage front, we are seeing the more creative loan products put on hold. These are the programs designed to accommodate the self-employed and real estate investors. Our primary bank and credit union lending sources continue to lend and to offer attractive terms, albeit with interest rates a bit higher than the public is expecting due to the intense uncertainty surrounding the mortgage market at the moment.