Today, I want to try to answer some of the questions I’ve been asked most frequently about real estate and the COVID-19 pandemic.
Has real estate been affected? At this very moment, not too much. Buyers are still buying, sellers are still selling, but going forward, that will likely change.
Are buyers and sellers still interested? Yes. Some have moved their timeline up (hurried to buy and rush documents) because they were worried about a potential lockdown, but as Utah considers all real estate industries to be essential (including lenders, title companies, builders, etc.), work has been able to continue as normal for the most part, with lots of work being done remotely.
What about interest rates? How have they been affected? The fed rate has been dropped to 0% (which happened between 2008 and 2011). This is the rate that lenders borrow from each other and the federal government, and while not directly tied to the mortgage rate, the mortgage rate tends to follow the fed rate. So, as the fed rate dropped, so did mortgage rates.
How does the no-paying-your-mortgage announcement change things? With the announcement of mortgage payment delays, investors have been nervous. Servicers have to make your payment even if you don’t pay your mortgage, so servicers haven’t wanted to buy FHA (government) backed loans, which hurts those that want FHA loans. While FHA loans only account for 18% of the loans on the market, they are most sought after buy first time home buyers, so it’s made it more difficult for first time home owners to buy.
Have these announcements hurt higher price points? Yes. These changes have hurt the jumbo loan market, making larger loans riskier and more difficult to obtain.
Can I still buy a home? If you have good credit and a down payment, you’ll be fine. Those most affected will be first time home buyers and those with small down payments or poor credit. Well qualified buyers should have far fewer problems.
Will things change? Most definitely. Right now, houses are still getting multiple offers, people are actively buying and selling, and listings are still going live. This will likely change moving forward and chances are that we will swing into a buyer’s market instead of the current seller’s market.
If you have a real estate question not tied to these current FAQs, feel free to shoot me an e-mail or text message.