There is no known vaccine. Will the coronavirus epidemic that has sickened 28,000 people and taken the lives of 560 souls turn into a pandemic?

Isolation measures go only so far. And, that’s not working too well as coronavirus has spread to 25 countries, including the U.S. where we have 12 reported cases in six states, including California.

How will this tragedy affect the U.S. housing market and mortgage rates? Exactly when will we hit (mortgage rate) bottom? And, what is that interest rate number going to look like? 3%? 2%? Negative 1%?

According to Trading Economics.com, China represents 21.95% of the world GDP. All forms of travel, manufacturing and trade with China are resulting in a big slowdown in commerce. This is a very new and moving parade, so detailed results are yet to be realized.

As the virus spreads, Chinese growth will be impacted negatively this year, according to Professor Raymond Sfeir, economic analysis chair at Chapman University. Demand for oil will drop. Supply chains will be disrupted.

Blindsiding events like this drive volatility in global stock markets. The U.S. Treasury market tends to be a money safety haven as investors sell global stocks and buy U.S. Treasurys. The average 30-year fixed mortgage rate fell to 3.45% on Thursday, Feb. 6, the lowest since August 2016.

The refinance index increased 15% from the previous week — its highest level since June 2013 — and was 183% higher than same week one year ago, according to the Mortgage Bankers Association. The 10-year Treasury yield, which is the benchmark for 30-year fixed-rate mortgages, fell around 20 basis points last week.

“(That’s been) driven mainly by growing concerns over a likely slowdown in Chinese economic growth from the spread of the coronavirus,” said Joel Kan, MBA’s vice president of economic and industry forecasting.

Could this have a domino effect? Could it tip the U.S. into a recession?

Not necessarily, but we could see further economic disruption. Consumer confidence could wane if this virus continues to grow long enough. And, we might witness the banks just saying no to new business loans.

The 10-year Treasury is at 1.66% while the 2-year Treasury is at 1.44%. They are both trending lower. If enough money floods the U.S. Treasury market, we could see the long-term bond rates sink below the short-term bonds, a condition known as an inverted yield curve.

Banks tend to reduce or stop lending when shorter-term money is more expensive than longer-term money, making continued economic expansion tougher. If banks have to offer depositors higher short-term deposit rates than they can charge on long-term business loans, they are losing money. And, they carry the risk that some loans will default.

No-cost refinancing with an improved mortgage is the ticket right now because rates may be trending lower for quite a while. You might be able to do it again in six months with another no-cost refinance. Refinancing is like gambling with house money. Improve your rate as you can.

Mortgage rates may certainly stabilize or rise once the coronavirus is contained. We just don’t know for sure when that will occur.