Lately, it can feel like each day brings a new headline about fluctuating market behavior. But amid the ups and downs of 2020, there may be some potential good news on the horizon. On July 16, 2020, the interest rate for a 30-year home loan had fallen to 2.98%. In addition, the average interest rate for a 15-year home loan had declined to 2.48%.1,2,3
Good news for homebuyers
Keep in mind that just two summers ago, the average interest rate on a 15-year fixed-rate mortgage hovered around 4%, while the 30-year was in the vicinity of 4.5%. With the average interest rate on these loans at new historic lows, it may be a smart time for first-time buyers to consider making their move.
In other words, it's uncertain how long these historically low rates will last. Keep in mind this article is for informational purposes only. It's not a replacement for real-life advice. It’s always a good idea to consult with your tax, legal, and accounting professionals before considering any changes to your living situation.
Good news for investors
Believe it or not, hopeful homebuyers are struggling to find the right property: on July 4, 2020, the inventory of existing homes for sale was 31% smaller than it was in 2019. Even with these market conditions, 61% of respondents to a recent survey felt that buying a home in 2020 was a good idea. This interest in purchasing a new home despite the COVID-19 pandemic may be considered a “coincident indicator” by many. In other words, if consumers feel confident enough to go home shopping, that could indicate slowly returning economic confidence as well.3
Good news for everyone
Real estate plays an integral role in the health of the economy. Even when considering the many advantages of homeownership, it can be easy to forget that it is one of the greatest sources of wealth and savings for many Americans.4
Whether or not rates will drop even lower is anyone's guess. Even though it seems unlikely, mortgage issuers are dealing with a level of uncertainty that makes it harder for them to judge risk and assess the long-term value of the loans they originate.
Let me know if you’d like to chat about this or any other topics you’re pondering. I’m always here to help.