I had other subjects I intended to write on for this week’s article. However, when a once in a lifetime opportunity presents itself, it becomes newsworthy and a story worth telling.
Two weeks ago we mentioned how interest rates and inventory will shape this real estate market for 2020. Last week we talked about Coronavirus and its possible impact on the market. This week it’s a combination of both, and what the once in a lifetime opportunity is and how to take advantage of it.
Once in a Lifetime Opportunity
Because of Coronavirus, the financial markets have been lowering the yields on the 10 yr Treasury note in a flight to quality. The Coronavirus brought global recession fears as business and travel would surely slow due to the virus. Money fled out of stocks and into treasuries. The Federal Reserve was forced to have an emergency meeting and lower the fed funds rate.
30 yr mortgages are not tied to what the fed does. They are more closely tied to the 10 yr yield. As a rule of thumb, you can add about 2 percentage points to whatever the 10 yr yield is and that’ll be close to current mortgage rates.
10 Year Yield Hits Historic Low
An interesting thing happened this week. The 10 yr yield went down below 1% for the first time in history. When we add 2% to the 1% yield, we get 30-year rates about 3% or less. So, what is the once in a lifetime opportunity?
Buyers today can get a new mortgage at some of the lowest rates in history. It’s not free money, but it’s close enough for conversation. Every 1% drop in interest rates provides about 11% more purchasing power for a buyer. We’ve seen rates drop about 2% in the past year, so that’s about 22% more purchasing power for buyers.
Put another way, this also brings more buyers to the table. So if a buyer was having a hard time finding a decent property in their price range, they now qualify for more. Buyers may be able to go up in price range and get that home they wanted, and the monthly payment won’t cost them any more than it would have 6 months ago.
Sellers: Time to Stay or Time to Go
Homeowners could choose to refinance their home. Saving money each month would allow them to buy that dream home in Florida or save for retirement. All that extra monthly savings will somehow get reinvested back into the economy, which could fuel our economy into the future, long after this virus business has passed.
We have an open window right now. Nobody knows how long the window will stay open. We have several lenders we work with that offer little to zero lender fees, so now may be your once in a lifetime opportunity.
If you’re a seller and unsure whether to refinance your home or sell it and buy a new home, call Brett or Sande Ellis 239-489-4042 Ext 4 and we can look at your situation. We also have a Free home valuation tool that will give you an approximate home value online instantly. Simply go to www.SWFLhomevalues.com to get your free analysis.
The Ellis Team has a team of buyer specialists to help guide you through this once in a lifetime opportunity. We know you have questions. We can help answer real estate questions as well as help you with some lending options that might make sense for you. If you’re not sure if you qualify, that’s OK. Let’s get you with a professional and find out. It’s free to find out, and we’re here to help. Be sure to ask about our zero-lender fee mortgage available to our customers.
If you’re a seller, be sure to ask for Brett or Sande. This is a once in a lifetime opportunity, so we want to make sure you make the best decision for your family. If you’re thinking of buying and would like to search the MLS like Realtor’s do, go to www.leecountyonline.com
Good luck and Happy House Hunting!
See last week’s article “Coronavirus Impact on Real Estate Nationwide and Locally”