As the Coronavirus pandemic continues to destroy our world’s economy, the risks lenders face is only increasing. That risk is priced into mortgage loans. The low interest rates have reached record values. Is this good news?
Mortgage rates continue to hit historical lows, and if the economic impact of the COVID-19 continues, the rates could go even lower. For example, according to Freddie Mac, the 30-year fixed-rate mortgage averaged 3.28% during the middle of May. The rate further drops due to the rise of unemployment in the US. It is suggested that low interest rates, joined with mortgage delinquencies, will be greater than during the Great Recession. Many people have lost their jobs and their source of income. All of this has lead to the rise of the people who entered the forbearance agreements just to avoid missing mortgage payments. Now, millions of homeowners are missing payments, which brings lenders in the trouble. This is why the rates have been reduced. However, is someone benefiting from the current size of interest rates?
The house demand has dropped by 35% near the end of April, during the peak of the Coronavirus pandemic. However, low interest rates can be the cause of a rebound. Even during May, the demand was just 19% lower than last year, which shows an increased compared to the previous month. This is why this might be the right time to make that home purchase.
How Low Interest Rates Affect the Housing Market
When interest rates are low, it usually encourages home buyers to enter the market and make that purchase. Low interest rates mean more affordable mortgages, so those who were on the fence to buy the property in Milwaukee are more likely to take out a home loan. Hopefully, this can lead to the housing market in Wisconsin returning to normal.
Of course, if the home demand gets higher than average, then the housing prices will increase and homes will become more difficult to obtain. This can lead to the cycle, as then the interest rates will rise, which can make property demand drop again. Interest rates are an important factor in making housing market predictions, so potential home buyers have to keep an eye on them.
Can Low Interest Rates Benefit Homeowners?
Low interest rates can be beneficial for homeowners who want to refinance their mortgage. Refinancing mortgage can be costly decision for most homeowners, and now seems like the good time to do so. Keep in mind that this depends on when you have obtained your last mortgage, and on how much your equity has increased. If you decide to release equity now, the extra cash may come in handy if the pandemic prolongs. However, this decision shouldn’t be made lightly. Unless you have already contemplated selling your house, keep this as the last stand.
Can Low Interest Rates Benefit Home Buyers?
Home buyers that are signing contracts on new builds are already seeing their loan rates go below 3%. This is why low interest rates are considered great from a consumer’s perspective. This moment is great for people who are confident that their income will remain steady during and after the crisis to enter the housing market. Also, the low loan rates can help to maintain the property’s price. If we take into the consideration that there are more and more millennials buying houses in the recent years, low interest rates bring nothing but long-term benefit for the buyers.
But there are negative sides to this, as well. When you buy a house when the rates are low, you might be left with not too much of an incentive once you decide to sell your property, especially if the rates go back up. This can decrease mobility in the housing market, which can lead to home shortages. This can also be bad news for real estate investors, who will try to take advantage of the low interest rates, but as the rent rates are also low, increased competition can only lead to loss of profit.
Can Low Interest Rates Benefit Home Sellers?
As home buyers are more likely to purchase houses to use the opportunities given to them by the current interest rates, home sellers are more likely to make a sale of their property. Whether they want to sell their house the traditional way or to the local home buyer in Milwaukee, this might be the good time to sell your house. Another advantage that is given by this terrible situation we are in is lower competition. Currently there are less houses being listed, so your property can stand out easier.
How to Sell Your House to take Advantage of the Low Interest Rates?
There are various tips you can find on how to sell your house to take advantage of the low interest rates. Here, we’ll give you a brief list of hints you can use to sell your house fast.
The most important think that you should think of when you’re selling your house is to list it at the appropriate asking price. If the house is offered at the too high price, no one will want to purchase it as they can find a better deal elsewhere. On the other hand, if the offered price is too low, it will implicate that there is something wrong with the property.
Offer owner financing
Owner financing is a great option when you want to increase the number of potential buyers, but it doesn’t come without its risks. As a lot of people are wanting make a sale while the interest rates are low, there is an increase of the unreliable buyers that won’t be able to repay what they owe on time.
Sell to a real estate investor
If you want to make a quick sale of your house, the fastest way to sell it is to find a reliable real estate investor in Milwaukee. Real estate investors are also looking forward to purchase new properties while the interest rates are low, and they come with a bunch of other advantages. Most of them, such as Sparks Property Investors LLC, pay in cash, which means that you will quickly get money in your pocket. This is extremely useful during the times we live in right now. Also, despite them offering lower price than you might like at the first glance, what they offer is what you’ll get – meaning there are no additional expenses, such as closing costs, repair expenses and commissions. If you need to make a quick sale of your property, this might be the best way to go. Especially if you yourself are planning to sell your house just so you can buy a new one while the interest rates are low.