The #1 move every current and/or prospective homeowner should make is to check the latest mortgage rates for a refinance or purchase. The mortgage rates might not be at 0% or even as low as they were 2 weeks ago, but we will see them dip again! I literally have a book of potential transactions. It is with me at all times and I add clients on a daily basis. Some of those clients have already applied for the loan and are simply waiting to lock. Whether purchasing or refinancing, remember that locking in your interest rate doesn’t have to happen immediately. Many clients are simply poising themselves to lock in at the push of a button as soon as we see a dip in rates. I would HIGHLY suggest that buyers not put their home search on hold right now. Take advantage of the fact that you might be able to submit your offer as one of 3 rather than one of 10, that maybe you won’t have to offer over asking or insert an appraisal clause into your contract. You might actually be able to ask that the inspection items be completed vs accepting the property in as-is condition for fear that it might make the sellers run into the arms of another buyer. At last…. buyers could have a small window of time with the upper hand!
Watching the rates is tough since it is hard to be certain that the media is accurate and since you never know if what you are seeing and hearing is an apples to apples comparison. One lender is advertising a rate with points to buy it down, one lender is offering a “No Closing Cost” loan, and one is offering down payment assistance, which is a completely different animal.
First of all, take a look at a 10-year chart of mortgage rates. As you can see below, mortgage rates are close to a 10-year low in 2020.
But the chart above only captures the big picture of 30-year fixed rate mortgages, 15-year fixed rate mortgages, and 5/1 Adjustable Rate Mortgages. What happened to mortgage rates since the coronavirus outbreak?
Mortgage Rates During The Coronavirus Outbreak
After January 17, 2020, the 10-year bond yield, which is the best proxy for the direction of mortgage rates collapsed. The 10-year bond yield went from 1.86% all the way down to 1.54% once global markets realized the coronavirus was spreading. This 0.32% move in such a short time is huge and current and prospective homeowners should take advantage.
It Is Time To Buy Real Estate
The median home price in America has been coming down since early 2018, as a result, we’ve seen two years of home price softening. At the same time, the S&P 500 has surged ahead (+31% in 2019) and mortgage rates have fallen. Therefore, it is likely that there will be more money put into the real estate market in 2020 and beyond.
Real estate prices usually only decline by 2-3 years at most. Take a look at the latest decline in real estate prices between 2007 – 2009. After two years, real estate prices slowly crept up for 3 years, and then exploded higher starting in 2012.
If you’re considering buying a primary residence and plan to live in it for more than five years, I WOULD BUY!! As with anything else, just make sure you run the numbers.
As the market and the world move incredibly fast, we are all doing our best to keep up! Many of us are navigating these uncertain times from home while entertaining our children and or pets, cooking (which I find especially hard!), attending online school, Zoom meetings etc. I will do my best to share my insights for what they are worth.