(Newswire.net — March 17, 2020) —
Those who have been paying attention to the news have likely had their fill of Coronavirus-related news; however, there is one important impact that most people are forgetting. This has to do with the housing market. In response to the Coronavirus pandemic, mortgage rates have been in free fall. Now, the mortgage rates are approaching all-time lows. As a result, people who are looking for a house might have an opportunity to purchase property at an interest rate they will never see again. There are a few reasons why mortgage rates have fallen so far during the Coronavirus pandemic.
First, the Federal Reserve has been making dramatic moves in an effort to halt the free fall that is the United States stock market, which most people as representative of the overall economy. The Federal Reserve is responsible for setting the primary interest rate. All other banks follow suit. When the market is in free fall, as it currently is, the Federal Reserve will try to cut interest rates in an effort to get people to spend money in the economy. When the Federal Reserve cuts interest rates, the rest of the banks tend to follow suit. For this reason, mortgage rates are starting to drop as well. When mortgage rates drop, this makes it easier for people to buy a house.
Recently, the Federal Reserve made a dramatic move when they cut interest rates to zero percent. This hasn’t been done before in the United States and rarely happens across the world. For this reason, the market is currently in an unprecedented situation. Indeed, we are living in unprecedented times. The move shocked many people around the country; however, given that the market is still in free fall, many people saw this coming. As a result, mortgage rates dropped once again. Now, many people are comparing these mortgage rates to those that were seen after the housing crash. This represents a once in a lifetime opportunity for people to buy a house. People might be able to buy a house that is larger or in their dream location.
Furthermore, the Federal Reserve still isn’t done. They also announced that they are going to start the process of buying $200 billion of bonds that are backed by mortgages. The Fed’s direct entry into the housing market is likely going to drop mortgage rates even more. It seems like the conditions cannot get any better for someone to buy a house. With mortgage rates so low, many people can purchase a house that they would not otherwise be able to afford. For this reason, many people are already jumping into the housing market.
For those currently working with a mortgage broker, now is the time to buy. The market is incredibly turbulent right now and it is unlikely that the current market is going to last. While many people are looking to buy a house right now, it is also a great time to refinance. With so many people looking to refinance a house, this is likely going to lead to a jump in mortgage interest rates before too long. For this reason, anyone who is looking for a house should try to act now. Otherwise, they might miss out on this opportunity. The market is turbulent and even though interest rates are low right now, this is unlikely to last.
If someone is looking for a house, mortgage interest rates are one of the most important factors they need to consider; however, there are other factors that merit discussion as well. For example, someone also needs to consider the size of the down payment they can afford. Sometimes, putting down more money will help the mortgage interest rate drop even farther. If the buyer puts down more money, this is less the bank has to put up. As a result, the bank will be taking on less risk. Then, the bank might respond by lowering the interest rate. Putting down more money will also help someone avoid having to buy something known as PMI, which stands for Private Mortgage Insurance. This is an added monthly cost the bank might ask someone to purchase to protect themselves in case the borrower defaults on the loan.
Without a doubt, these are turbulent times for the market. While some people might be nervous to buy during such a challenging time, the fact is that mortgage rates have plummeted to all-time lows. It is hard to predict if, or when, these rates are going to be seen again. For this reason, many people have already rushed to refinance their homes. Those who are looking to buy a house should try to take advantage of the massive opportunity. With such low mortgage rates, people might be able to afford their dream house.