Welcome to a special edition of Real Estate Insights. Today is August the 9th, 2019 and I want to talk to you briefly about mortgage rates. See there’s been some chatter lately. I’ve seen some publications either in my mailbox or on the internet or even on TV of some people prognosticating that in the fourth quarter of this year we would see mortgage rates climb to as high as 4.6%, and quite frankly, I think that’s an intimidator. I think that’s fear-mongering to get people to try and buy homes now before rates go up, and I’m going to take the other side. I’m going to say that rates are actually going down and I’m going to give you a brief tidbit why, but also where.
Now, one of the people that I listen to most closely is a gentleman named Barry Habib with MBS Mortgage Highway. So I have to give him a lot of credit on this. Right now, mortgage rates were as low as about 3-3/8ths just a couple of years ago, we had a long, long multi-year slide down to that area. Many of us took advantage and refinanced at those levels and it was fantastic. Rates crept up to about 4.7% last November of 2018. They have now fallen to about 3.6%. The federal reserve cut their interest rates last month and even though the Fed cuts rates doesn’t mean that mortgage rates go down, but they tend to follow each other. So with that said, a recession is likely coming in 2020, and in a prior broadcast of this, I mentioned that recessions are not bad for housing. In fact, in four of the last five recessions, housing is actually gone up in value. And one of the main reasons why is that when we come across a recession, we see lower interest rates to get people to engage economically.
Lower interest rates mean more people could afford to buy your home, and housing is a big portion of our economy. So as we start looking at a recession in 2020, I believe that we will see interest rates actually continue to go down. Right now, we’re sitting at about 3.6 to 3.75% on a 30-year fixed mortgage. I believe that sometime between Thanksgiving and 4th of July, that’s Thanksgiving of 2019 and the 4th of July of 2020 we just might see some of the lowest mortgage rates that have ever been and there will be an opportunity for you to refinance again if you didn’t get the chance to get a really low rate the last time.
But this will also mean that if you are a buyer in the next year, there’s an opportunity coming with low rates to become because you’ll be able to afford more home than you normally would’ve and pay the same payment or you’re just going to buy the same value of a home that you originally thought and have a lower payment. It also means that if you are thinking about selling in the next 12 months, there will be more buyers who will be able to afford your home due to lower interest rates. So I would tell you that right now our economy is very healthy. It’s never perfect, but it is very healthy. And for the housing market, we will see a very, very good period coming over the next 12 months. If you have further questions about this, feel free to reach out to me at email@example.com or by text at 720-320-2288. It’s a great life.