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Low Mortgage Rates.. Are they here to stay?
September 09, 2020 at 4:20pm | Ryan Flanagan
Covid-19.. 2020 Election Year.. Mortgage rates... What do they all have in common? All the answers and more right here in this informative interview with Aaron Arlington (Flat Branch Home Loans) and Ryan Flanagan (The Flanagan Group).
Ryan Flanagan and Aaron Arlington discuss mortgage rates, whats happened to them since COVID-19, where they anticipate them to go, the upcoming election year, and what to look for or things to capitalize on right now.
Ryan - "So Aaron, let's rewind to what happened during the last six months with COVID-19 for mortgage rates. Has it rebounded? Has it stayed pretty steady?
What has happened since March in our world?
Aaron - "In the mortgage industry, a lot has happened. How it relates to the borrower, is that it worked out great for them because mortgage rates are
super low. This is my 20th year in the mortgage industry, and when I first started we were in a refinance boom. I was refinancing people from 9% down to 7.25% - 7.5%. - "So, I'm sure your parents told you the story of walking to school, up
hill both ways in the snow, and how they paid 18% on their mortgages.. Well we're going to be bragging to our kids someday that we had a mortgage rate in the 2% range. It's a great opportunity to take advantage of the lower rates and save
R- "To rewind a little bit, and not to get into all the nuances of it, but when COVID-19 first hit I remember we had a lot of conversations like, what's
going on and I mean there were instances where you couldn't even lock a rate because the rates were going up and down."
A - "So when it first started, nobody knew what they were doing and everybody was scrambling. Things have kind of settled down but the reality is there's
more risk involved now. The amount of people that have asked for assistance has kind of had a ripple effect and so a lot of the mortgage servicers are kind of tightening up. That comes all the way back to us where, you know, we've had to raise
our credit score requirement slightly on some of our programs. There are still lots of opportunities and we're still doing lots of loans and helping lots of people."
R - "Just take a step back from a year ago, where were we compared to where we are now as far as interest rates go?"
A - "I would say, even a year ago, rates were really good. They were probably in the mid 3% range and so we're almost a full point lower."
R- "Almost a full point lower in just a years time, and a chaotic year at that!"
A - "The way the mortgage rates work is, anytime there is bad news or when the economy is suffering, when the unemployment rates are high, when there is
a lot of unknowns, thats when the mortgage rates get lower. I'm anticipating once they announce a vaccine for COVID-19, once the election is over, when things start to settle down and improve, you're going to see mortgage rates go back up.
R - "So that's a good note to have, if you're satisfied with where you're living now and maybe you're in that 4% range, I would encourage you to talk to
Aaron to see if he can refinance you into a better position.
R - "You brought something up with that last point. The election year. What is typical of an election year when it comes to mortgage rates?"
A - "Around election time again, a lot of unknowns and the word volatility really comes to mind. You're going to see the stock market have big swings,
up and down, and the mortgage rates are directly correlated with the stock market. When you see big swings with the stock market, you're going to see big swings with the bond market which regulates mortgage rates. You could see some big moves,
but I think it's going to be temporary. I think once whoever takes office and the dust settles, you're going to see mortgage rates settle back down. Whether they go up or down, they will level out."
R - "Obviously we're seeing historically low (mortgage rates). It's going to be really hard to go lower, wouldn't you agree?"
A - "Well, if you would have asked me 3-4 months ago, Do you think the 30-year fixed (interest rate) will ever get in the 2% range? I would have said no,
because I've never seen it before (in 20 years). And that's the thing, when we've never seen a rate that low, it's like why would they get that low? But now that we've seen it, that's the million dollar question will they continue to get lower?
There are people that I refinanced a year ago, when we thought rates were really good in the low 3% range, and they thought they were getting a great deal. Had they known, they would have waited a few more months and got an even better rate.
It's scary to think that the rates will get any lower than they are now."
R - "Thats amazing, well guys we just want you to be apprised of what's going on in todays market. Obviously it's a fantastic time to buy based on rates.
There's a great opportunity to refinance if you find yourself above like a 4% (interest rate) and you're happy with your home you want to stay there for a little bit. It' s definitely a great opportunity to sell as well because we're seeing
inventory be pushed down on the selling side, driving prices up and then obviously from a borrower's perspective they're able to get into homes at a much lower rate based on the interest rate itself. If you have any questions about the market
right now feel free to reach out to myself or Aaron and we can help in any way. I hope you guys are staying blessed, staying safe and we'll catch up soon. Thanks."