The Sum Up: How low can mortgage rates go?

COVID-19 related news stories are dominating the headlines and it can be hard to keep up – and easy to be overwhelmed by everything that’s happening.

At Addition Financial, we are here to help you sort through any news related to your finances. While most of the stories you read might be negative, we’re happy to be able to tell you that not all financial news is bad. In fact, there is good news related to mortgage rates. Here’s what you need to know.

Mortgage Rates Lowered

In any financial crisis, government agencies act to minimize the crisis and help ordinary citizens get by. A recent story in Housing Wire noted that the Federal Reserve announced plans to cut rates and purchase up to $700 million dollars in mortgage bonds.

The goal with the announced spending is not to reduce mortgage rates, but rather to keep liquidity as high as possible to minimize the damage caused by economic upheaval. With millions of Americans staying at home, many of whom are now unemployed, it is the Federal Reserve’s responsibility to do what it can to help.

The increased liquidity does have an impact on interest rates, both for every homeowner and potential homeowner. The rates are favorable and for that reason, there may be some good news.

How to Take Advantage of Mortgage Rate Changes

It might seem counterintuitive to buy a home or refinance in a time of worldwide crisis, but let’s talk about the potential advantages of the current mortgage rates.

Buying a home at the moment may be difficult because most of us are working from home. However, some real estate agents are still showing homes. And, if you viewed a home before the crisis became apparent, you might be ready to make an offer and take advantage of the low rates.

We suggest contacting your lender and getting pre-approved for a mortgage. This is a good time to do it and to potentially lock in a favorable rate.

The same is true if you already own a home, particularly if you have a variable rate mortgage. This is a good time to refinance and lock in a lower rate, thus reducing your monthly payments. Refinancing can help you save a lot of money over the term of your mortgage – and many of us want the financial security of having a lower monthly payment in case the crisis proves to be a long one.

Weighing Risk and Reward

While there are some advantages to buying a home now, we would be remiss if we didn’t take a moment to say that we want our members to be safe in this difficult time. If you or someone you live with has an underlying medical condition or is in a high risk group for COVID-19, we hope you will put your safety first. Staying at home may be the best option for you – and it is likely that mortgage rates will remain low for some time.

Whatever you decide to do, we are here to help. Click here to read more about Addition Financial’s mortgages and refinancing options.