We’ve been seeing record low rates with very minimal fluctuations for months. The beginning of October marked the tenth week in a row that average rates have been around or below 3% depending on the mortgage program and your situation. This trend has brought about a significant increase in demand for homes. Despite the uncertain and difficult environment, the last several months have seen, the housing market has experienced a significant increase in activity. While an upward trend in the mortgage industry is to be expected in any recession due to rates falling, many experts didn’t imagine this much of a boom with the recent shutdown. So, is now the right time to take advantage of these low rates and refinance or purchase?
No one ever knows for sure what’s going to happen, especially after an unexpected pandemic with devastating and far-reaching effects. For this reason, no one can say with certainty whether rates will continue this way. Some experts, such as the Mortgage Bankers Association, have projected that rates will increase in the coming year. While rates have remained low, volatility increased within the last few days. It’s hard to say where rates will be even in the next month due to impending consequential events such as the 2020 presidential election that could cause volatility in the market.
President Trump’s recent COVID diagnosis did little to affect mortgage rates, despite a valid assumption anyone could make that this news would impact the market. But if even a significant instance of political uncertainty failed to change rates, how can we predict what might? With rates so uncertain, we can’t necessarily rely on the continued low state of them. While they could very well stay low, many homebuyers are eager to grab a low rate, choosing not to take the risk that they will stick around.
Due to low rates, applications for refinances and mortgages for home purchases have increased considerably. According to the Mortgage Bankers Association, refinance application volume grew 50% higher than it was a year ago. Mortgages for purchases were 21% higher than last year. But while refinance applications have continued to increase, mortgages for purchases have begun to fall, despite still being higher than they were the year before. Specifically, purchase activity has slowed in the lower price tiers due to low supply and personal economic hardships people are facing due to the financial impact of the pandemic. Activity in the high price tier has increased, causing the average loan size to rise to a new record.
If buying a house or refinancing your home is on your radar, now is a good time to take advantage of low rates. In such uncertain times, it’s a good idea to snag a low rate while you still can. Still have questions? Our Loan Originators can help you figure out what’s best for you and your specific situation. Contact us today for guidance on the mortgage process tailored to your unique needs.
Sources: Mortgage News Daily, Housing Wire, CNBC