With the world in quarantine with the ongoing coronavirus pandemic, the stock market is in bear market territory, sending interest rates even lower.
A year ago today, March 17th, 2019 interest rates on a 30-year fixed-rate loan was 4.25% (that’s historically low)
Today it’s 3.25%!
If you’re searching for a silver lining, here it is. An interest rate below 4% is pretty insane.
Rate Serch: Check Today’s Mortgage Rates
The Coronavirus has hit the United States hard. Rudy Gobert of the Utah Jazz in the National Basketball Association tested positive for the Coronavirus on Wednesday, March 11th.
In response, the NBA suspended the season for at least 30 days.
Every other sports league and events are canceled or postponed until the virus is contained.
The stock market crashed, sending the Dow from 30,000 to 21,000 a drop of 30% in a matter of days.
Interest rates are taking a beating and are at the lowest levels they have been in years, making it an excellent time to refinance or get a new mortgage.
Why Interest Rates are Low
When the stock market is strong, mortgage rates increase, but when the market is down, mortgage rates go down with it.
In a time where half the population is self quarantined, it may seem odd to be doing anything, but most lenders remain open and refinance applications are at a ten year high, up 75% week over week, and 192% from this time last year.
If your current interest rate on your home loan is 5% or higher, it may be the ideal time to refinance into a lower interest rate.
Currently, the rate on a 30-year fixed-rate mortgage loan is roughly 3.5%.
Refinancing a mortgage with a 5% rate to one with a rate that is 1.5% lower would save you tens of thousands of dollars over the life of the loan.
Fed Cuts Rates to close to Zero
In an attempt to avoid the next recession, the Fed drastically cut interest rates on Monday. This does not necessarily mean that mortgage rates will get any lower. As of today, you can get a 3.5% rate or better, and I don’t see them getting. Much lower than this.
This also means that rates have nowhere to go, but up, however, I don’t expect that to happen anytime soon.
Refinance Applications at 10 Year High
In February, mortgage refinance applications were up 50% from January. Applications in March are on pace for a similar jump, a rate not seen in a decade.
Homeowners are rushing to take advantage of the historically low rates available now.\
Check if Refinancing Makes Sense
There are costs associated with refinancing a mortgage loan. Just like when you got a mortgage, there are closing costs. This can range from 1% to 4% of the loan amount. But if you’re able to get a significantly lower interest rate, then the costs are well worth it.
First thing you should know if you don’t already is the rate on your current mortgage. If you don’t know it, just log into your loan servicer account online to find out. If it’s more than 5%, refinancing could lower your mortgage rate by more than a full percentage point.
Should you Refinance Right Now?
While the entire country is quarantined, many people are working from home, including loan officers. You can apply for the loan and get approved without leaving your house.
The savings could add up to tens of thousands of dollars in savings over the life of the loan.
With mortgage rates in the low 3’s, there isn’t enough room for them to get much lower, so now is as good of a time as any.
Are you interested in refinancing your mortgage?
Randall has over 15 years of experience in the mortgage and credit industries. He spends a chunk of time helping consumers understand their credit, advise them on how to increase their credit, and lending his mortgage expertise to help them find the right type of loan. Randall lives in Dallas, Texas with his two sons.