We won’t sugarcoat things. The Pandemic has been rough on all of us.
However, when something major changes in society, there are almost always “corrections” which take place to offset them.
In the lending world – when delinquency gets too high – lenders tighten their guidelines.
Leading into COVID, American’s were struggling to save money & racking up debt at record levels.
Remarkably, COVID seems to be pushing that trend in the opposite direction which means good news for the real estate market.
Silver Lining 1: Skyrocketing Savings Rates Among Americans
Amid the pandemic, Americans have tightened their wallets and started stockpiling money, at least according to the data.
Back in April, the personal savings rate hit 33%, a historic level according to the U.S. Bureau of Economic Analysis. This was the highest rate seen since the department started tracking data in the 1960s.
Experts attribute this trend in part to consumer fear and uncertainty, which is understandable given pandemic-related job loss, furloughs, and the shutdowns.
Alongside, Americans have curbed their spending and opted to save their disposable income instead of investing it in stocks or bonds.
More cash on hand directly correlates with mortgage rates.
More cash means more capital and lower rates enticing consumers to borrow.
Silver Lining 2: Decreasing Consumer Debt
Hand-in-hand with saving liquid assets, Americans are paying down their debt and even paying off outstanding credit card debt, home equity lines of credit, car loans, student loans, and other debt.
Experts say less debt means less borrowing and less demand for lenders. Enter lower mortgage rates.
Silver Lining 3: Those in Mortgage Forbearance Continue To Pay
According to the data, almost 4 million mortgages are currently in forbearance, which means borrowers have put a pause on their payments or have lowered their monthly payments. However, the Urban Institute found that as many as 1 million borrowers are still making their payments. This is leading to a perception of less risk in lending and, thus, lower rates.
Ready to Go After Your Dream Home? We Can Help
It’s anyone’s guess as to whether or not all this good financial news means mortgage rates will fall further.
But one thing is certain, it’s still a great time to secure a home loan if you’re ready. That is, of course, if you can find a house and get an offer accepted.
Rates have fallen and it’s a seller’s market in many communities.
When you’ve found the one and you’re ready to quickly put in a competitive offer, make us your first call.
We’ll help you get pre-approved, lock in your rate, and get everything you need on paper for an accepted offer on your dream home.