Low Rates for the Taking

For the last 2 years, I’ve been hearing from various sources that we should be preparing for rates to increase, especially as we see unemployment rates improve. I think most speculators will honestly say there are so many variables that one factor alone cannot be an accurate predictor of what rates will do. Only the Federal Reserve (“The Fed”) can know for sure.

What we do know is that over the last year we’ve seen rates increase, then improve, and we are currently in a very low rate environment again. The outcome of the presidential election caused rates to initially increase since financial markets were surprised by the election of President Trump. As unemployment rates began to drop and the markets leveled off, rates began to improve during the spring market. And, as we’ve seen for at least the last 5 years in real estate, inventory remained relatively low with many buyers in the market taking advantage of the low rates. For those selling the DC metro area, many saw multiple offers and escalations on offers. The general consensus throughout the real estate industry and mortgage lenders is that we need more inventory because there are a lot of people who want to buy now while rates are in the sub-4% range.

In addition to purchases, the last few weeks have been a great time to think about refinancing. Gina Myers at Intercoastal Mortgage Company pointed to an increase just this month in refinance business. She says “This past week we have hit the lowest rate level of the year, essentially back to where we were Q3 in 2016. This is due mainly to a ‘flight to quality’ with the threat of global nuclear conflict. During times of global concern, we see investors seeking safe haven in the US Bond market, which equates to lower interest rates.”  She goes on to say “In the last week, I’ve originated about 35% of my total refi business for the year, due to rate drop.”

If you purchased in the last year or two with a higher rate, now could be the perfect time to think about refinancing. If you’ve been sitting on the fence about buying or selling, professionals would say that now is both a great time to sell or buy. We never know what the rates are going to do and unpredictable global factors can cause rate changes and volatility in a short period of time. What we do know is that rates remain at historic lows and that even a .5% change in rate can have a pretty significant impact on your monthly mortgage payment.

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