The circumstances arising from the coronavirus (COVID-19) pandemic had pointed to an unprecedented presidential election cycle all along. But when the prediction came to life, it made for an election week like never before.
Instead of hours, it took days of objective analysis to find a projected winner to the presidential seat. In addition to bringing endless media marathons to life, this suspense also came with the lowest mortgage rates ever recorded.
The Shift This Week is Being Tied to the Election
While the mortgage rates drop in 2020 has happened repeatedly, the election week came with its own distinction. As such, it brought down the rates to a record low since Freddie Mac started tracking them in 1971.
The 30-year fixed-rate mortgage rate went down to 2.78 percent, the lowest it has been in almost five decades. To be fair, this wasn’t the first time that such a record has been broken this year. In fact, it was the twelfth time in 2020 that average mortgage rates dropped to a record low.
According to Freddie Mac, the shift that started earlier this year had been due to the economic impact of COVID-19. But the current slide of mortgage rates also has much to do with the political climate of election week.
The Mortgage Rates Are Enticing for New Buyers
While the mortgage rates may shake up lenders, they are still good news for new homebuyers. With affordable interest rates, even those buyers who have a limited budget are now able to purchase their dream home.
This has actually been the case for the past few months of 2020. With the lowest mortgage rates in years, buyers are flocking towards various regions in the country. From luxury properties to starter homes, they are going after offerings that fall within their budgetary range and housing needs.
To put it simply, the mortgage rates drop in 2020 has amassed a movement of homebuyers that is quite unexpected. But this high demand, rapid interest, and tight inventory has also worked in favor of sellers. Many of them are getting closing offers at asking price, while others are going above their expectations.
It is Also a Great Opportunity to Refinance Your Home
The effects of these low mortgage rates aren’t limited to home purchases alone. They also go beyond this aspect and extend to measures such as refinancing existing mortgages. This allows homeowners to bring down their overtime housing costs.
Many financial experts recommend refinancing if it can bring down your existing interest rate by one to two percent. Since the current rates are at their lowest ever, they help homeowners meet this criteria pretty easily.
This has inspired those who want to turn their existing home loan into something more affordable. By reaching out to different lenders, they can benefit from some of the lowest mortgage rates in history. As a result, they can keep their home as it is, but with an accessible long-term loan to boot.
The Federal Reserve System has mentioned that it plans to keep its benchmark interest rates to near-zero until 2023. This indicates that even when the mortgage rates go up, they might not restore their previous value anytime soon. In other words, you may as well get used to these heightened buying and refinancing activities in the near future.
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