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Mortgage Rates continue to hit record lows, with 30 Year Fixed Rate Mortgages trending under 3% now. As I eluded to last month, the persistent drop in mortgage rates is largely being driven by the Federal Reserve’s purchasing of mortgage backed securities in response to the Covid-19 pandemic. The intent remains the same — stabilize the mortgage market and help stimulate the economy.
Black Knight estimates that more than 90% of all borrowers have existing mortgages with rates higher than current prevailing rates. In these cases, a rate-term refinance to secure a lower monthly mortgage payment is worth consideration. Our Mortgage Loan Originators can run your scenario and offer insight into the viability of this option.
In terms of the housing market, there was a record increase in pending home sales in May, as more homebuyers entered back into the market. While the low mortgage rate environment is likely responsible for this, pending sales from the prior two months being held up did too.
As for housing prices, the Corelogic Housing Price Index is predicting that housing appreciation over the next year will slow down. They postulate it may even turn negative in 2021 because of lasting negative economic effects stemming from the pandemic.
Nevertheless, I expect steep competition for homes that do become available for sale due to scarcity. There is a growing desire among homebuyers to find larger spaces with a dedicated room available for a home office; there are not many of these on the market, so I would presume these properties will move faster.
In summary, what we are looking at is a historic period of housing affordability. Whether you are purchasing or refinancing, Lyons Mortgage can help you take advantage of that.
Mortgage technology: Next month I’ll get into more detail about how the mortgage industry has streamlined its’ ability to make the application process easier for clients by enhancing online capabilities.
See you next month!
Stephen Casil, Vice President
Secondary Marketing Manager