It’s Christmas, and many of us in the country are spending the day much quieter than in years past. We can only hope that the vaccine they have promised us will bring our world back to normal and next Christmas will truly be a time to celebrate. But there is still much to be celebrated, and historic low mortgage rates may very well be at the top of Santa’s list.
The 30-year fixed-rate mortgage fell below 3% in July and stayed there. On Dec. 10, the 30-year fixed rate hit a low of $2.71%. So far, the low rates are holding steady at between 2.5% and 3%, but there are signs that those rates may not hold into the new year, so there is a lot of scrambling around to lock in this month.
According to industry research firm Inside Mortgage Finance, during the first nine months of the year, lenders extended $2.8 trillion in mortgages. And it didn’t slow down in the last quarter of 2020 with a predicted volume exceeding the prior record of $3.7 trillion in 2003. It is forecasted by industry firms that more than 9 million homeowners saved money by refinancing this year.
Like so many other byproducts of the COVID-19 pandemic, home lending has surged, producing record low interest rates. With the economy seriously impacted by the pandemic, homeowners were looking to lower their monthly payments or pull some equity out of their homes for needed renovations. The timing was perfect, with homeowners having the time to work through the documents required for a mortgage refinance, and the mortgage industry more than willing to find a way to do paperwork and closings digitally to accommodate homeowners.
However, if you haven’t done a refi or a new mortgage since the financial crisis, the Dodd-Frank Consumer Protection Act enacted in July of 2010 may be a bit of a shock. There are pages and pages of disclosure forms for the borrower to read and agreed to. Fortunately, they are all available digitally and every lender is doing their best to get this required information out to their clients as quickly and easily as possible. Still, don’t be surprised if you feel your eyes starting to cross halfway through.
In addition to homeowners taking advantage of low interest rates, many are moving, as we’ve reported before. Leaving cities to work virtually in the suburbs has been an ongoing trend for white collar professionals who are requiring more space indoors and outdoors resulting in a demand for more expensive homes. According to the National Association of Realtors, nearly one in four homebuyers between April and June bought houses priced at $500,000 or more. This is up from 14% of buyers during the preceding nine months.
And, if you’re a renter, that’s going to cost you more as well. In September, single-family home rentals climbed an average of 3.8% from a year earlier across 63 markets in the country. This increase is being accelerated for the same reason that buyers are moving, leaving cities for suburbs and wanting more space.
Wishing everyone happy holidays and good health. Hopefully, this will all be over soon; stay safe.
