Lowest Rates In 50 Years
Interest rates took a dive this week, making rates the lowest they have been in almost 50 years. The Federal Reserve slashed rates to fuel the economy in the wake of the potential economic impact of the Covid-19 coronavirus. It was the first emergency rate cut in 12 years, and the largest one-time cut since 2008. The Fed cutting rates is pushing mortgage rates down to 3% and below in many cases.
Path & Post’s website, pathpost.com, has seen a spike in buyer registrations as a result, with a new all-time high of 700 new buyers registering on the site to search properties. The website also saw a new high for the number of property views on the site.
What Do Low Rates Mean For Buyers?
For buyers, interest rates dropping from 4% to 3% means a 13% increase in purchasing power. The mortgage payment for a $250,000 loan at 4% is equal to the mortgage payment for a $283,000 loan when the rate is only 3%. For buyers it can mean a more comfortable payment or it could mean being able to afford a home with a basement or a larger home or a larger lot size.
What Do Low Rates Mean For Sellers?
Sellers benefit from jumping in this market as well, with more buyers in the market as well as more buyers being able to afford homes at 13% higher price points.