If you’ve been thinking about entering the homebuying market recently, chances are you’re aware that mortgage rates have been quite low for some time now. While they have finally begun to rise again in small ways, the current state of mortgage rates is one of the most favorable to buyers we’ve seen recently — but what does this actually mean to you as a buyer?
At Altius Mortgage and our partners with Mortgage Ogden, these are precisely the kinds of questions we’re here to answer as we assist prospective homebuyers with a huge range of mortgage options, including mortgage refinancing for those who already own a home. Here’s a primer on why mortgage rates are relatively low, what this means for buyers, and what you should be thinking about in this area as you move forward.
Why Mortgage Rates Are Low
There are three major factors that have contributed to such low mortgage rates over the last couple years, including:
- Economic uncertainty: Due to both COVID-19 and other factors, there is a great deal of uncertainty when it comes to both our domestic and international economies. This sense of general unease about investments has caused people to move their money towards relatively safer options like low-interest mortgages or certificates of deposit.
- Low federal interest rate: Partially in response to that economic uncertainty, the Federal Reserve lowered the federal funding rate to affect the prime interest rate. This, too, contributed to lower rates for mortgages both big and small.
- Lively hosing market: As the pandemic caused people to rethink their living situations as a whole, the housing market remained relatively strong as buyers continued to seek out homes. This contributed not only to low mortgage rates but also pushed homeownership higher than it has been in years.
What Low Rates Mean for Buyers
While low rates are very important to many buyers, and may allow them to enter the homebuying market sooner than expect, they aren’t the only factor at play. In particular, current low interest rates are mitigated by the fact that supply of homes is so low.
This is a major “seller’s market” in terms of real estate today, meaning that homes are selling fast and for high prices. So while you may be looking to capitalize on low interest rates during this time period, know that many others will be doing the same.
Impact on Refinancing
If you’re a current homeowner considering a mortgage refinancing, this picture is a little more clear-cut. For most refinancing needs, lower interest rates are purely a good thing — they mean that you can get a lower rate, and get it faster. Many who are considering refinancing look to time the process for when rates are at their absolute lowest.
For more on what mortgage rates really mean for those looking to obtain or refinance a mortgage, or to learn about any of our mortgage rates or programs, speak to the team at Altius Mortgage today.