Mortgage Rates Increase by .02%, but No Cause for Alarm
Mortgage rates ticked up recently, but that shouldn’t distract us from the big picture; rates are as low as they’ve been in nearly fifty years, and potential home buyers are able to afford pricier homes (because lower rates over the lifetime of a loan means the total amount paid is lower).
As of February 13, 2020, the 30-year fixed-rate mortgage (“FRM”) increased by .02% from 3.45% to 3.47%; while this minor uptick should not be concerning, it is worth noting that the rates had decreased during the previous 3 weeks. It should also be noted that 3.47% is still a historical low. The 15-year FRM has held steady below 3% at 2.97%, and the 5/1 adjustable-rate mortgage (“ARM”) has dropped .04% from 3.32% to 3.28%.
These low rates are very good for everyone involved: lenders are seeing a massive surge in refinance requests, and buyers are able to capitalize on lower rates to reduce the lifetime cost of their loans. It appears that purchase loans are seeing their highest activity since about a decade ago; this is a perfect combination which benefits the housing market as a whole.
It needs to be noted, however, that the low rates also encourage sellers to artificially raise the price of their property; since people can afford more, they will spend more. To highlight this point, the National Association of Realtors (“NAR”) reported that home prices increased in 94% of all metropolitan areas nationwide following Q4 2019 (while rates were decreasing). Thus, the real winners in all of this may be the sellers.
At the Chernov Team we understand that knowledge is power, and knowledge of how the market is behaving is powerful knowledge indeed. At the Chernov Team we know that whoever comes to the table most prepared leaves with the most, and the Chernov Team always leaves the table with the most.