As young people, Baby Boomers often opined that if we could ever get our parents’ mortgage rates, life would be grand. After all, Mom and Dad only paid around 5% - 6% for fixed 30-year mortgages. A few decades ago, Boomers were paying up to and including about 18% for mortgages. We all “knew” that we would never be so fortunate as to see those old 5% rates.
Guess what. It not only happened, but we actually beat that 5% rate over the past few years. Forgetting, for now, the unpleasant economic reasons why that happened, it was fun and profitable for those of us who fixed our mortgage rates, many under 4%.
Our recent economic upturn has caused the FED to gradually tighten monetary policy. Mortgage rates rose back up to the (once-desirable) 5% range. Then, a strange thing happened. When the calendar turned over to 2019 rates began to fall, even in the absence of any easing FED policy.
Suddenly, we again find ourselves in an era of (nearly-forgotten) low mortgage rates. In many geographic areas, 30-year fixed-rate mortgages are once again under 4% for qualified buyers. Further, although home prices have risen, the increase in home values remains manageable. In short, we have perfect conditions for purchasing a home right now.
Perhaps strangely, the national inventory of homes for sale is very small. This would generally result in rapid price appreciation, but price appreciation seems to be lagging. This has provided an opening for anyone who is thinking of changing homes to both sell their current home and buy a new home at a good price, and with great financing terms. It is a “Goldilocks” market for both buyers and sellers. Not too hot, and not too cold, it is “just right.”
Anyone contemplating a home purchase, or a home sale/purchase, should move quickly. Market conditions are virtually unprecedented in our lifetimes. No reasonable person would expect this situation to be anything other than short-lived. In our opinion, now is an excellent time for those who have been contemplating action to execute their plan.
Van Wie Financial is not a licensed real estate brokerage, and our expectations are based solely on experience and knowledge of financial markets and interest rates. Consult a real estate professional if you are contemplating a change in your housing situation. You may well be glad that you did it -- right now.
Van Wie Financial is fee-only. For a reason.