How Mortgage Interest Rates have been Affected by COVID-19
The COVID-19 pandemic has had quite an impact on families in the United States. Not only have many been in social isolation for the last two months and migrated to homeschooling and working from home, but several have also taken advantage of the lower mortgage interest rates that have become available. If you’re someone looking to refinance, or even buy, now could be a great opportunity.
Rates for home equity lines of credit (HELOCs) and fixed-rate mortgages have dropped since the Federal Reserve announced they would be buying billions of dollars’ worth of mortgage-backed securities (also known as quantitative easing) to help keep money flowing through the financial system. Doing this ensures lenders have money available for people to still borrow– allowing them to purchase new homes or refinance their current properties. These lower interest rates were created to help stimulate the economy for when COVID-19 reaches its peak.
Those looking to refinance are likely in a better position than their home buyer counterparts because the COVID-19 pandemic has also put a damper on new home listings and sellings.
Interest rates may have dropped, but so have new homes on the market. Mortgage applications are down, and home sales in general have declined.
If you’re looking to buy right now, you may have noticed fewer homes are listed today than there were back in February before the pandemic hit (which is completely ironic considering now is typically the most popular time to list a home and buy). The pandemic has also forced many people to work remotely– sometimes causing a delay when it comes to filing all the necessary paperwork for purchasing a new property. To help you secure your new home quicker, try getting a mortgage pre-approval letter (that helps sellers feel confident that their sale will go through), and be flexible with closing if possible.
Lenders are keeping extra busy right now with all the refinance applications being submitted. You can help speed up the process by ensuring your application is legible and fully completed (online applications will alert you if you’re missing any of the criteria). If you find yourself looking to refinance, make sure you shop around and compare their “Loan Estimates” (as all lenders are different and will have different rates), and are well-informed of everything upfront.
If you’re looking to shorten your term, lower your monthly payment or even replace your ARM with a fixed-rate mortgage, you may want to consider refinancing during this time. COVID-19 won’t be around forever, and neither will low interest rates. Contact us at Northern Title today to see how we can help you.