Home Buyers Benefit from Record Low Interest Rates in 2020

07/31/20
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Newspaper Article

Is now the time to buy new homes for sale? Absolutely, now is quite possibly the best time in history for buying a house. The reason comes down to just two words: interest rates. They have never been lower.

Consider that the interest rate for a 30-year mortgage now stands around a remarkable 2.98%. According to The Washington Post, in some cases, 15-year fixed-rate mortgages dropped down to 2.48%.1 This is about as close to a “free” money as most of us are likely to ever see. People working in the mortgage industry have expressed great surprise at these low rates.

The Wall Street Journal2 published an article last week pointing out that interest rates are now at their lowest levels in its 50 years of record keeping. Those who felt locked out of the market due to affordability are seeing a real opportunity. Now it a great time to be buying a house. Just think… if this is a 50-year low it could not be until 2070 that we see them this affordable again.

How We Got Here

Based on an article published by Freddie Mac, in just the last year, interest rates have dropped from roughly 3.8%3 down to only 2.98%. As any real estate agent will tell you, any interest rate drop will result in huge long-term savings. This almost full-point drop represents a big opportunity.

Brenda Richardson of Money assess each decade in her article “How Low Are Mortgage Rates Right Now?”. It is important to keep in mind that today’s interest rates are far below historic highs. In the 1980s, for example, interest rates peaked above 18%.4 These rates made it very difficult for people to buy homes at all.

Benefits Go Beyond Just Saving Money

There are many benefits of low interest rates beyond just saving money on your monthly mortgage payment. It also means that buyers can look at new homes for sale that were previously out of their price range.

Additionally, lower interest rates play a large role in helping first time homebuyers. The fact that they have to come up with less cash can make a huge difference when it comes to the available opportunities for finding the perfect single-family home to meet their needs.

In short, this is a unique period in history. Buying a house is a great way to build long term wealth and financial stability. With rates like these, there has truly never been a better time to become a homeowner.