Low Rates Aren’t Always A Good Thing

While it may seem like a no-brainer that low interest rates are always a good thing, for the overall health of the real estate market, they aren’t always. Right now, mortgage rates are at near historic lows. That’s great for new home owners and those looking to buy right now – but in the long run, low interest rates could make it more difficult for the real estate long-term market recovery. Let me explain. More than 1/3 of all homes with a mortgage right now have a mortgage rate of less than 4%, according to CoreLogic. Since rates are low, many people can afford homes that they could not if rates were just 1% higher. Some buyers were even able to get a rate of 3.3% in 2012 and have held onto those loans. Because of these amazing interest rates, many filmmakers may decide that they don’t want to sell. When selling means that you must move into a new home with a higher interest rate, staying put may come to feel like a better investment. If a property owner must move, they may decide to hold onto the property and become landlords rather than lose the low interest rate.

No matter the reasons, property owners will not sell as much in the near future, meaning that there will be fewer homes for sale, providing fewer opportunities for new buyers to find the home they want. This is a significant change from how the housing market has worked for the past three decades. usually, whenever a home owner wanted to sell and buy a new home, mortgage rates were usually lower than when they had bought. Now, that’s not the case. It may make selling less attractive to property owners.

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