Interest rates have gone down drastically. You’ve probably heard about that, but you might be wondering why that is.
Investors like to invest overseas and locally. When there are issues overseas, they will pull their money from overseas markets and invest in the bond market. The coronavirus pandemic overseas has caused investors to pull overseas investments and buy bonds. Bond market rates are followed closely by mortgage rates, so as bond market rates go down, so, too, do mortgages.
Interest rates are linked to your credit, so if you have perfect credit (or at least good credit!), then you can get some unbelievable rates. If you bought a $350,000 home last year in March of 2019, your best interest rate would be 4.21%, which would give you a mortgage of $1,741. This year, a $350,000 home would give you a mortgage of $1,531- saving you over 200 dollars a month!
This also means that if you HAD been shopping in a $350,000 price point, you could now afford a $400,000 mortgage due to the interest rate drop!
Now, other than interest rates dropping, how else has the market been affected?
I’ve had people who have had their down payment tied up in stocks leave the market, I’ve had investors join the market as they try to liquidate their homes for cash, I have people who were supposed to leave the country choose to stay and then not sell their property, and I’ve had people looking to buy in the next year or two decide to buy now because of the low interest rates.
What does all this mean? It simply means that the pandemic has thrown a change into the plans people have, so it brings some people to the market who wouldn’t otherwise be there and causes others to leave.
So, while the coronavirus has affected the market, it hasn’t been necessarily negative, just a change in people’s behavior.
I watch over the market meticulously and look for changes, so if you want to know what’s going on, feel free to contact me!