By Brian Tewes and Brian A. Tewes
If there is one thing for certain, it is that we are living in distinct times. The threat of COVID-19, the Fed’s emergency rate cut, and entire countries being put on lockdown (all in a matter of weeks, mind you) have led to head scratches throughout the nation. As governments and the societies they oversee look to wade through these uncharted waters, one fact remains: it is the time to buy or refinance. New loan programs (primary home, no income documentation, bank statement, asset depletion, etc.) have recently come to the market. Couple that with the established loan programs (FHA, VA, conventional) having more lenders offering loans and it becomes a win-win for consumers.
Mortgage rates typically are based on a handful of indexes, with the main indexes being the U.S. 10-year Treasury Bond, Mortgage-Backed Securities (MBS), and the Federal Reserve Funds Rate. As bond yields drop, mortgage interest rates generally follow. In March alone, the U.S. 10-year Treasury Bond saw its lowest yield in its history, going as low as 0.301%. Compare this to the financial crisis of ’08, when its low was 2.04%, and your jaw might begin to drop. MBSs, on the other hand, have generally stayed the course with an upward trend. As the influx of mortgages continues to come in, MBSs result in a positive distribution. Simply put: the mortgage industry is strong, and MBS reflects it. And then of course there is the Fed dropping their Funds Rate to 0%, which has been done before countless times in its history. As a reactive move rather than proactive, the Fed’s rate drop didn’t affect the already-low mortgage interest rates, but rather solidified it. At this point, all that’s left to do is call your lender or broker to find out what amazing rate you qualify for, whether it be to refinance or purchase.
It’s no secret that residential inventory (more buyers than sellers) has been in a steady decline for the state of Florida over these last few years. Throw in a conservative, annual appreciation of around 3%, and you’ve got a seller’s market. With a high demand and not enough supply to address it, residential construction has taken off in response. It’s clearly visible throughout the entire state, seeing and hearing of “new construction” going up. That’s helped level out inventory levels in some major cities, with more rural areas following suit.
Whether someone is looking to refinance or purchase, now is the time to strongly consider it. Mortgage interest rates remain at historical lows, despite their ongoing fluctuations. The volatility isn’t too much of a factor, given that they are staying within a range that’s more beneficial than anything we’ve seen in the last 5-plus years. The market for a mortgage swiftly came upon us; it’s here now. Make sure to take advantage of it before it goes away as quickly as it appeared.
— Tewes Mortgage company has offices in Marathon, Orlando and Fort Lauderdale. More information is at tewesmortgage.com.
