If you thought mortgage rates couldn’t go any lower, you thought wrong. As of this week, mortgage rates are at a 50-year low. The net result of this is an unmitigated win for the housing market.
Specifically, the 30-year fixed-rate mortgage (“FRM”) dropped to 3.29%. This rate is even lower than the 30-year FRM during the government’s response to the housing crisis in 2012 (it was 3,31%). Moreover, mortgage applications have increased significantly, up 10% from March 2019 – there are no indications this trend will slow down in the near future. The 15-year FRM dropped to 2.79%, and the 5-year adjustable-rate mortgage (“ARM”) dropped to 3.18%.
Naturally, this is a result of the Federal Reserve’s Tuesday decision to cut short-term federal interest rates by 50 basis points (a basis point represents 0.01%) to combat the unstable market in the wake of the coronavirus outbreak (we haven’t seen a cut like this since 2008).
These record lows represent a major boom for would-be home buyers, as even a single basis point can represent thousands of dollars over a 30-year loan. Naturally, these rates are also motivating people to refinance, which can represent a problem of its own. Given the massive influx of people seeking to refinance their homes, many lenders are keeping their rates higher in an effort to reduce demand and not overload their systems. The more modern lenders who are on top of technological advances, however, will likely drop their rates in order to gain a larger market share of refinances (provided they have the capital).
As it relates to buying and selling your home, most analysts project a housing boom over the remainder of 2020. The takeaway? Now is a fantastic time to buy or sell your home. For buyers, rates will never be this low again (we hope, since low rates typically mean things are up in the air with the economy). For sellers, they can charge more for their homes as there is ample funding available.
At the Chernov Team we understand that knowledge is power, and knowledge of how the market is behaving is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leave with the most, and the Chernov Team always leaves the table with the most.