It’s safe to say that these last few months have brought unprecedented changes to the real estate industry. As we begin to navigate a new normal, homebuyers everywhere are wondering how the current global health crisis has impacted mortgage rates — and there are a few changes that everyone should know about.
An Update on Current Mortgage Rates
Despite the slower than average housing market, it’s still very possible to get a fantastic mortgage rate. However, COVID-19 has ushered in more than a few more surprising home loan trends—here are some of the highlights.
Rates have hit historic lows
Mortgage rates have sunken lower and lower in recent months, which is fantastic news for homebuyers. However, the Federal Reserve has plummeted rates even further to deal with the ongoing crisis and stimulate the market.
As of mid-May, the average rate for a 30-year fixed mortgage is just 3.51%, while 15-year fixed mortgages are sitting at 3.12%. According to federal lender Freddie Mac, these are the lowest rates ever recorded!
Expect to see a slight increase
As the economy begins to recover, many financial analysts believe that a slight rate increase could come in just a few months. In a recent study by Bank Rate, a majority of experts believe that rates won’t get any lower—which means now is a fantastic time to enter the market.
If you aren’t quite ready to buy, there’s no need to panic. A huge spike is highly unlikely, so we’ll probably see rates stay below 4% for the remainder of the year.
Refinancing is at an all-time high
Low mortgage rates aren’t just beneficial for buyers—they can help current homeowners, too. Many homeowners are choosing to refinance their loans to obtain a better interest rate, but this can actually come with a few consequences.
If you’ve already paid off most of your loan, refinancing might not be a good option for you—and it can actually cost you more in the long run. Some lenders are actually increasing their fees or rates to handle the large influx of refinances. In fact, today’s refinance rates are reaching 4%, which is .5% higher than the average home loan rate.
It’s harder to get a mortgage
Mortgage rates might be more favorable, but it’s actually getting more difficult to secure a loan. In order to prevent a crisis akin to the Great Recession of 2008, lenders have increased credit score and down payment requirements. Some have even stopped issuing more “high risk” mortgages, like jumbo or interest-only adjustable rate loans.
Despite these stricter requirements, it’s still possible to get a loan that fits your financial needs. If you’re feeling a bit overwhelmed, a mortgage broker can outline your potential options and shop around for the best rate.
Need Help Understanding Mortgage Rates?
Finding the right mortgage might seem challenging, but working with a top real estate agent can make all the difference. If you’re thinking about buying a home in the Montgomery County area, I’d love to offer my expertise! Just reach out to me with any loan-related questions, or check out my mortgage calculator to crunch some numbers.