3/20/2020

Rates Stay Near All-Time Lows

What do low rates mean for you? If you own or in the market for a home, it is a great time to refinance or buy with the current low rates!

There’s a line in the song Limbo Rock that fits our current mortgage rates perfectly: How low can you go? After hitting an all-time low on March 5, the 30-year fixed-rate moved up slightly a week later, while 15-year fixed rate mortgages and 5-year Adjustable Rate Mortgages (ARMS) actually fell further. A review of the Freddie Mac Primary Mortgage Market Survey chart shows we are still in historically low rate territory.

If rates for 5-year ARMs and 15-year fixed-rate loans fell, why did 30-year fixed-rates rise? It’s a matter of lender capacity. Low rates cause high demand, especially for refinances, and the 30-year fixed-rate mortgage is the most popular home loan. It can be challenging for lenders to process a large volume of loans in a timely manner, so an uptick in rates, even a slight increase, will slow demand and allow lenders more time to catch up. And if you’re wondering what kind of total loan volume is projected for 2020, consider these numbers from the Mortgage Bankers Association (MBA): 2020 mortgage originations are expected to increase by 20.3 percent over 2019.

What do low rates mean for you?

If you own a home, it continues to be a great time to refinance. If you can afford to refinance from a 30-year fixed-rate loan to a 15-year fixed, you can really benefit. Talk to us about the trade-offs, because while you will most likely have a higher monthly payment, you could save tens of thousands of dollars over the life of your loan. Refinancing from a higher-rate 30 to a lower-rate 30 brings benefits, too. And remember, if your home has appreciated, you may be able to take advantage of a cash-out refinance. Let us run the numbers so you can see what will work best for you.

If you’re in the market for a new home, it’s a great time to buy. True, housing inventory is very tight in many parts of the country, but people haven’t stopped selling their homes. Recent national data from the National Association of Realtors® shows that although sales dropped from December to January, they rose significantly year-over-year. If new housing starts continue to grow, the inventory crunch will start to ease, and these low rates make it an attractive time to become a homeowner.

One thought: Trying to time the market – that is, refi or buy when the rates are at their lowest – is virtually impossible. Right now we are experiencing tremendous volatility because of the impacts of the coronavirus. No one knows exactly what rates will do, but common sense says if rates are at or near historic lows, it’s a good time to act.

Earlier I mentioned lender capacity. When you work with us, even in these busy times, you’ll receive an outstanding loan experience, from application to closing and beyond. Contact us today to discuss your home loan needs.