Across the United States, homebuyers are showing less urgency than in recent years, according to all market reports. According to the report, while the demand is active more than a third of homes for sale across the country had a price cut of more than 1% and discounts are increasing compared to last year. But Why are Interest Rates going down?
The gap between home prices and selling prices is widening in several markets. The California Realtors Association, for example, found that the ratio of the state’s rate reaches the sale price its lowest point in 20 months in June 2019.
Matthew Graham, the Chief Operating Officer at Mortgage News Daily, said in an interview in March, “This is happening due to big-picture reassessments of global economic growth, or lack thereof.” He further added that if his and the fears of other experts get validated, rates will remain near the top of the range for quite a while. He expected this to stay the same for months, and maybe years. And he doesn’t see to be much wrong either.
Among this crisis, there was a silver lining for buyers and refinancers
Mark Fratantoni, Chief Economist of the Mortgage Banker’s Association, helps us to answer Why are Interest Rates going down: “Our forecast still calls for mortgage rates to tick up higher later in the year to an average of 4.6 %. The recent drop is great for prospective buyers on the search for a home this spring”. “The combination of lower rates – especially compared to last spring – and moderating home-price growth improves buyers’ purchasing power. Hopefully, translate to a somewhat faster pace of home sales than previously expected,” he added.
Fratantoni’s statement comes from back in March 2019, and since then the rates have declined even further. According to Freddie Mac, the average rate on 30-year fixed mortgages was 3.75%. This rate has seen a rise only eight times throughout this year. It is not good news if you are a financial institution or someone looking to sell your home in South Bay.
Why is it a good time to buy new homes or refinance your mortgages in South Bay?
As a buyer, you always want to pay the least for a South Bay real estate. Luckily for you, rates have dipped to their lowest point in years right now, making home purchases is cheaper than ever. Compared to last year’s June, when the prices peaked in the year, prices of homes in South Bay, and the whole of California have dropped at least by an average of $18,500. That’s a lot of savings considering slow down in economic growth that is expected to see reduced disposable income and reduced savings.
Interest rates at minimums have also made it cheaper to refinance a mortgage loan
Anyway, the article “Why are Interest Rates going down” and experts call to consider factors such as the financial burden and the total cost. According to data, the rate to request a loan to finance a home is approximately 3.5%; furthermore, in the first half of May, it fell to 3.3%.
According to economists and mortgage experts, attractive levels of interest rates are seen to force such decisions in people. But it must reconcile with the financial situation of households, where it will depend a lot on whether the financial burden is high or low. They emphasize that the scenario is more favorable for people who have stable and quality jobs and, therefore, higher incomes than for those who have unstable and precarious employment.
Along with the article Why are Interest Rates going down, it recommends that both to take a loan and to refinance it, the debt should not exceed 25% to 30% of the income. And be fixed in the total cost of the credit, as the additional insurance, and not only in the rate. A price that usually does not consider is the operational cost. These include a property appraisal, title studies, deeds, notary fees, and the real estate broker’s commissions.
All things said and done; we highly believe it is the right time to buy a home in South Bay if you find someone selling, looking for real estate in South Bay? Contact Casa Bella properties today and make your search more comfortable than ever before!