The spread of COVID-19 has truly impacted “normal” life in every sense of the word, and that’s especially true of the U.S. economy.
The global pandemic and resulting economic uncertainty have triggered historically low mortgage interest rates, which are likely to remain at this point for a long time.
Why did the coronavirus impact mortgage rates? In February, it was unclear how the coronavirus would affect the economy, and mortgage rates dropped as investors purchased “safe” investments, such as U.S. Treasury bonds.
In March, the country experienced market volatility as the impact of the coronavirus became clearer; this resulted in mortgage rates moving up and down dramatically, even in a single day. In order to calm the markets and create much-needed stability, the Federal Reserve stepped in and began buying mortgage-backed securities to keep credit flowing.
The end result: mortgage rates have settled at low levels and remain there. This means that it’s a great time to buy a home. Some of our mortgage lenders share insights here:
Natalie C. Dodson, Assistant Vice President | Mortgage Lending NMLS #574151
“Since rates are so low, most of my first-time home buyers are paying less for a mortgage payment than they are in rent, and the home is theirs to own. House prices tend to rise over time, so with that in mind – combined with the low interest rates – today is definitely the best day to buy.
I have been in the business for almost 20 years. Today’s rates are historically low; just 15 years ago, I refinanced my home to a 15-year mortgage at 4.625%. Not even close to the interest rates we are seeing today!
Or consider this – my grandparents refinanced out of a 13% interest rate!
A low interest rate means you can pay the house off sooner, pay less interest or potentially have more buying power. For all those who want a piece of the American dream by owning their own home, today’s interest rates will help them do that.”
Corey Kates, Mortgage Lender NMLS #1652367
“Right now, we’re in an incredibly unique situation in the housing market. If you look back to around four decades ago, the average age of individuals getting married was right around 22 years old. Compare that to the average age of a couple currently at 30. On the flip side, the average age that a couple buys their first home together today sits at about 33-34 years of age.
This is an important statistic because in 1989, there were over four million births in the United States (which is the first time that has happened since the “Baby Boomers” hit four million births in 1964!) Put these stats and dates together, and it tells us that we’re on the verge of an incredibly saturated buyers’ market the next few years.
We had already been seeing this trend prior to the pandemic. Now in the current state of the global economy, we are sitting at all-time low interest rates across the board, which translates to homeowners having more money available each month for a mortgage payment.
For example, if you were looking at a $90,000 home last year, you may be able to afford the $100,000 home now for the same principal and interest payments with all things equal, compared to last year’s average interest rates.
For those whose income hasn’t been severely affected by the pandemic, today is an incredible time to purchase a new home. As we continue to move forward and resume more typical activities, it is very likely that we’ll have a very large number of buyers looking to purchase a home – which leads to more competition for the house that you want!”
Mortgage rates and terms differ based on borrower qualifications. Talk to your INB mortgage lender today about your personal situation.