What Does Selling A Home "As Is" Mean? - Fridays with Fred

What’s Happening With Dropping Mortgage Interest Rates?

If you are planning on buying a home in Southern California, you most likely are aware that mortgage interest rates dropped by half of a percentage point recently.

This move by the Federal Reserve was made in large part to offset the financial damage from coronavirus which by late February and early March had already begun to shake the financial markets.

The good news about the Federal Reserve cutting interest rates by half of a point means that consumers have more buying power than they did before the rate cut.

Lower Mortgage Interest Rates Increase Buying Power

Let’s say that you previously qualified for a mortgage interest rate of 3.75% and now you qualify for a rate of 3.25% (or 3.00% if it’s available to you). A lower interest rate means that you will, of course, be paying less money for your mortgage loan every month than you would have before. 

In terms of buying power, a rate cut also means that if you were pre-qualified for a $500,000 mortgage loan before, you may now qualify for a mortgage loan that’s $525,000 to $535,000 or higher.

A drop in interest rates is fantastic for buyers as a whole, and sellers because lower interest rates bring more buyers to the market, creates more inventory and increases instances where sellers receive multiple offers on their homes.

Contact The Fred Sed Group

Could interest rates drop again? That’s a question that many buyers, sellers and investors have been asking in recent days. 

Waiting for rates to drop again is a big gamble because many people who follow the financial industry, including Jay Farmer of Quicken Loans, don’t feel that mortgage interest rates will go to zero percent.

Besides being a great time for traditional home buyers to purchase homes, now is also a perfect time for investors to add more investment properties to their portfolios. 

To learn more about what’s happening with the Southern California real estate market, or to speak with us about buying a home, contact us today by calling (800) 921-9231 or click here to connect with us online.