The Federal Reserve have just dropped rates to zero and launches a huge 700 billion dollar quantitative easing program. This, combined with other economy-affecting factors, brought the mortgage rates down to their lowest levels in approximately 50 years. This is in direct response to the Coronavirus.This is to help fight off any impact of the Coronavirus to real estate sales and home values, the Federal Reserve has pulled out all stops to make getting a mortgage very appetizing.
This beats the low interest rates during the housing crisis between 2008-2012. Many homebuyers and homeowners are taking advantage of this money-saving opportunity.
What This Means to Home Buyers
Mortgage applications increased by 10%-15% in the mortgage industry. The low interest rates are allowing some home buyers to be eligible and be able to be approved for mortgages. This is especially true for first-time homebuyers.
This also means that buyers may be able to afford a more expensive house. They will be able to save thousands of dollars over the life of a 30-year mortgage. This has certainly given a boost to buyers who were on the fence about purchasing a home.
It is also helping move-up buyers make the decision to sell their current homes and purchase larger or more expensive homes. A mini housing boom is anticipated and expected to take place for the rest of the year.
What This Means to Home Owners
Current home owners should consider refinancing. Mortgage professionals are saying that if you have an interest rate of 4% or higher, you should talk to your lender about refinancing. This may save you thousands of dollars in the long run.
It’s also a great time to take money out of your home for a home improvement project or to pay off other debt. Getting a home equity loan is cheap money right now. If you are thinking of selling your home, now is a good time. There are many buyers on the market right now and the inventory is still low.
Don’t Wait Too Long to Take Advantage of Low Interest Rates
While the interest rates are historically low right now, things could change later in the spring, summer or fall markets. The lack of inventory is keeping the demand for houses up. The low interest rates are stimulating more demand which will bring about a rise in house prices.
Advice to Home Buyers and Home Owners
If you are thinking of purchasing a home, refinancing your mortgage, taking out a home equity loan, up-sizing to a larger home or downsizing to a smaller home in the next 12-24 months, real estate brokers and mortgage professionals are advising that you do it as soon as possible. Here is one real estate broker explaining what he sees as the impact of Coronavirus on the real estate market. It is unknown how long these interest rates will stay this low. The stock market and economy are extremely volatile right now.
Talk to your real estate or mortgage professional about what is the best course of action for you right now. Owning a home is one of the most important investments you’ll ever make. Make smart choices today, and you’ll save a lot of money in the long run.