Low mortgage rates help propel U.S. home sales and the refinance market. Mortgage rates in the United States have fallen to the lowest level ever on the heels of concerns stemming from the coronavirus outbreak.
As mortgage rates remain near three-year lows, those who are considering refinancing shouldn’t wait on the sidelines. Many lenders have hit their capacity in terms of how many loans they can process. Banks are currently inundated with small business loans. This is a response to COVID-19 and the government stimulus, but are still processing mortgage loans.
Rise in Mortgage Applications
Mortgage application data has shown that a growing number of Americans have been applying for loans to finance the purchase of a new home. Most consider this a positive sign for the spring home-buying season.
“In order to take advantage of low mortgage rates, buyers will need homes to buy,” said Danielle Hale, chief economist at Realtor.com. According to Market Watch, the inventory of homes for sale has an hit all-time low amid the high demand from buyers. The low inventory is largely the result of depressed home construction activity in the wake of the 2018 recession, which did not keep pace with household formation across the country. Many single-family homes were also purchased by investors during the bust years and converted into rentals, further constricting supply.
Another factor that could prevent Americans from taking advantage of low rates is the overall health of the economy. Many buyers might get cold feet despite the potential savings they would be leaving on the table, Hamrick said.
“There’s no avoiding the fact that a home purchase is the most significant purchase individuals will make in their lifetimes” Hamrick said. Whether you are looking to downsize your home or take advantage of low interest rates, contact Karen Cannon, Realtors to walk you through the process. We can advise you based on the current climate and demand.
Sources: bizjournal.com; marketwatch.com