Buzz
If the idea of purchasing a house this year has been weighing on your mind, you're likely navigating a whirlwind of emotions.
Initially, when the coronavirus pandemic began to affect the U.S. economy, the Federal Reserve started lowering interest rates. This should have made it an ideal time to buy, despite the physical distancing challenges.
However, lenders responded by raising rates to levels that seemed unusually high given most other economic signals. Several factors led to this increase: lenders sought to limit a surge in refinancing applications during a period when they were also adjusting to remote work setups, and fluctuations in the bond market added additional pressure on rates.
Furthermore, many homeowners decided to take their properties off the market, believing that buyers would be scarce during the pandemic. This led real estate agents to adapt and find innovative ways to meet the ongoing demand for homes.
Mortgage rates have since fallen again. Currently, the average interest rate for a 30-year fixed mortgage is 3.21%, according to Freddie Mac. In fact, some borrowers with excellent credit may qualify for even lower rates: As per Mortgage News Daily, the average rate for a 30-year fixed mortgage dipped below 3% this week in “ideal scenarios.”
For the past six weeks, interest rates have remained below 3.3%, following a brief spike, while last year at this time, the average rate stood at 3.82%, CNN notes.
If you're looking to purchase a new home, this summer might be the perfect time to buy, despite it challenging traditional buying strategies.
Last year, we highlighted that the first week of fall is an ideal time to purchase a home. The reasoning? There’s less competition. With kids back in school, families are occupied, and sellers who have had their homes on the market for much of the summer are more inclined to negotiate.
This strategy holds true as the fall season progresses. October often sees sellers more inclined to make a deal, as they wish to complete their sale before the tax year ends.
Let’s face it about 2020, which, I must remind you, we are still in: Disregard traditional strategies. The usual assumptions about the ‘best time’ to buy anything this year are going to be unpredictable and not worth pursuing! If a home that fits your budget is available now, buying could result in significant long-term savings on your mortgage compared to waiting until the fall or even 2021.
While the Federal Reserve plans to keep interest rates low through 2022, even minor fluctuations in those low rates could lead to significant differences in what you pay for your mortgage over time.
For further information on home buying, be sure to check out this video:
