By Maddie Wilkey
Recently mortgage rates in the United States have reached an all time low, causing many families to refinance their mortgages. The Coronavirus pandemic plays a significant role in the Federal Reserve’s decision to lower rates. The Fed chose to lower rates in order to protect the economy from anymore damage due to the pandemic. These lowered rates create a perfect opportunity for homeowners to refinance their mortgages for their own benefit.
The Feds started lowering rates on March 3, 2020 (Lewis) and it was recorded that 30-year fixed mortgage rates were at 3.09% (Wichter). The chart shown shows 30-year mortgage rates from 1972 to February of 2020. It is stated that the 2020 low in February was recorded at 3.29%, but since then the mortgage rates have continued to decline becoming more beneficial for families who struggle with their finances. The last recorded historically low mortgage rate was in 2012 at 3.31% which is a 0.22% difference from our current 2020 mortgage rate. This chart also shows the highest mortgage rate in time which was 16.63% in 1981 during the recession in the United States, but once the recession ended the rates had a steady decline which helped to restore the economy.
Those who have mortgage loans and are choosing to refinance their homes are taking smart actions to saving more money and making an investment that will benefit them in the future. One example would be an average house in Pewaukee, which costs around $350,000. Say this house has a $70,000 down payment (20%) for a 30-year mortgage loan. With the current interest rate applied to this house after it is refinanced, the monthly payment is reduced down to $1,829 (Bankrate) for the house compared to the 2019 average interest rate of 3.9% when the monthly payment for the same house would be $1,955. The decrease in mortgage rates has helped to improve many families' financial situations since the struggle of our economy due to the Coronavirus pandemic. Families should take the opportunity to save their money by refinancing their mortgages.
Works Cited
Lewis, Holden, “What the New Coronavirus Means for Your Home Loan and Mortgage
Rates.” NerdWallet, 3 Aug. 2020,
www.nerdwallet.com/blog/mortgages/what-coronavirus-means-for-your-home-loan-and-m
ortgage-rates/.
Miller, Peter. “How Low Can We Go? 30-Year Mortgage Rates Chart Tells the Story Mortgage
Rates, Mortgage News and Strategy : The Mortgage Reports.” Mortgage Rates, Mortgage
News and Strategy : The Mortgage Reports, 2 Sept. 2020,
themortgagereports.com/61853/30-year-mortgage-rates-chart.
Wichter, Zach. “Mortgage And Real Estate News This Week.” Bankrate, Bankrate.com, 19 Sept.
2020, www.bankrate.com/mortgages/news-this-week-september-19/.
I have noticed this in my neighborhood, lots of houses up for sale. Im assuming moving to a different house in the area with the low mortgage rates. This benefits both the government and the citizens allowing people to buy their first house or move to a bigger better house. I can see this helping banks too getting more people to take out house loans and making the banks more money in the long run. Overall I see this as a huge + to the economy, The citizens, and the banks
ReplyDeleteThis post makes it a lot more clear why my mom really wants to buy a house currently; it is a really good time to at least buy on the market. Your post makes it make a lot more sense to me now because you used statistics that my mom never really explained to me. Has this mortgage rate changes made your family reevaluate anything?
ReplyDeleteYes it has! I chose this topic because my dad was talking about refinancing our house from a 30-year mortgage to a 15-year mortgage in order to save money especially since they want to move as soon as my brother and I move out of the house.
DeleteIt is interesting to see how COVID-19 effects different ways of life such as mortgage rates. I think that lowering mortgage rates is a very good way to boost the economy, in addition to helping families and individuals finance and be able to afford their homes in such a difficult time. I agree with your statements that says families should take advantage of low rates to refinance their mortgages for future use. I wonder if these rates will spike anytime soon, or if it will be a while before they neutralize again.
ReplyDeleteWhen I visited my cousins in Maine this summer, they said that due to high turnover because of low mortgage rates, houses were being sold unseen. People would just look at pictures and then buy the house without touring it. It really is the perfect storm for buying houses right now due to the previously falling rates and then the pandemic. I am wondering, however, how long will the positive effects of this last? In the future, mortgage payments could rise again before we are done rebuilding the economy because of the pandemic.
ReplyDeleteits very shocking to see what COVID-19 has done to the world. and our community. with not having enough money and seeking lower mortgage rates for people to afford. but the federal reserve can in with stimulus checks to help out with people unemplyoed. i was not as knowledge as before. but this gave me more insight on what is really happening in the world and the people around me struggling.
ReplyDeleteMortgage rates being at an all time low is an especially good thing for those in the lower percentage of household incomes. Those around 20-30 are statistically more likely to rent out a living space, rather than buy a house themselves. With mortgage rates being lower than normal, these people have an opportunity to own a house after their secondary education and further the economy buy owning property rather than simply renting it.
ReplyDeleteI have noticed the demand of people biying houses a lot more since covid hit. For example, my family was actually looking for houses in Alabama and North Carolina during May. The prices were exceptional and drew in my parents, unfortunately we didn't buy them because there isn't a need to move for my family. I've noticed in my neighborhood that house prices are actually increasing and the seller is getting much more money than the house is worth. Pewaukee is a pretty expensive place to live (depending on what neighborhood) and people are willing to pay that high price. I think Maddie did a really good job explaining what is happening in today's society as well as elaborating on the different reasons this may be happening. How will these prices be affected once life is back to “normal”?
ReplyDeleteThis post is super cool to me because my parents were talking about how they refinanced our house just last month. It's awesome to be able to understand more about how that works and why it's important. It also explains a lot as to why my Dad has been so busy working as a Real-estate agent. Houses are flying off the market because mortgage rates are so low and the economy is doing pretty well right now. Thank you for helping me understand this better!
ReplyDeleteWhen the mortgage rates are down especially like right now it will cause the home buying market to become much more competitive. More people will be looking to buy and house meaning more people will be looking to sell their house. A more competitive market for houses typically means higher prices. When more people are looking to buy a house more people are going to be looking at the same houses and would be trying to outbid the other people interested. This causes home prices to rise when the market is competitive. So right now with the low mortgage rates the prices of the available homes are rising with the demand.It is really surprising how a global pandemic affects something like mortgage rates and home prices, but it does make sense once you understand how it works. It also makes me wonder, once things get more under control how will the mortgage rates and home prices fluctuate then?
ReplyDeleteGood job Maddie I think you did a very good job comparing the numbers and differences in the new mortgage rates. Seems like a no brainer to refinance because they are saving thousands of dollars. My family was looking to buy a new house because I am the youngest child and leaving for college soon and they were very intrigued by the prices because they were cheaper than usual. For me I thought your article was very relatable and the information was easy to follow!
ReplyDeleteBefore reading this post, I really didn't know anything about mortgage rates because it's something I've never really worried about. Over the pandemic, my dad has been talking about refinancing the mortgage on his house but I never understood why. This post helped me understand the basics of a house mortgage and why my dad wanted to refinance the mortgage on our house over the pandemic. It's also interesting how COVID has impacted everyone's lives even with their housing situations. I'm happy that something was done for people who couldn't afford to keep up with their house mortgages with the unemployemtn rate so high with the pandemic. How do you think the lower mortgage rates will impact the future mortgages? Will it skyrocket, or increase slowly over time? And how long do you think these lower house mortgages are going to last?
ReplyDeleteI really appreciated how you explained the graph instead of just saying "the graph shows how the numbers went down." You also explained why very well due to the pandemic. This also makes me wonder though, will the mortgage rates stay low to help out lower income families, or will they have to boost back up to help out the debt in the government? Also, do you think that the election will have an effect on the low rates if the power is switched? I personally think that if Joe Biden were to win, the rates would go up because he would try and use those higher rates to fix the economy in other ways. Anyways, I really enjoyed the thoroughness of explaining why the mortgage rates are so much lower!
ReplyDeleteThis is really interesting! Not only are the lower mortgage rates helping people who are struggling with their finances, but also people who are well off. People are now able to save more money, and therefore spend more money. Since people have more money to spend, the economy should bounce back faster because people will be supporting local businesses and other places that were hit hard during the pandemic. My only question now is how long will these lower mortgage rates last.
ReplyDeleteI find it interesting how the rates are so low. It makes sense since so many people are laid off though. My dad works in credit and he keeps saying that nobody wants to foreclose a house even if there is a personal guarantee because it costs a lot of money and with the rates being low it means that more people will be able to afford it.
ReplyDeleteI find it surprising that the Federal Government has decided to let the rates slip this low. Especially at a time of crisis like this. In the 1980's crash the government let the rates go so high despite it being a very strong recession in the economy. In 08' the Housing Bubble burst and it looks like mortgage rates being to plummet leading to the 2012 all time lows. It defiantly looks like the housing market has slowed down as more people lead to re financing their mortgages and are less willing to sell to anyone and take advantage of the new low rates. I found this really interesting, thanks for sharing.
ReplyDeleteThis is super interesting to see that covid had at least one positive impact on us this year, and I'm sure many Pewaukee families are benefiting from it. It's crazy the mortgage rate is the same as it was in 2012. This raises a question though, when the mortgage rates go back up and you try to sell your house in the future, will that back fire?
ReplyDeleteThe example at the end and the graph in the middle were really helpful to my understanding of what you were saying. I think you did a great job of putting facts/numbers throughout your writing to support your argument about mortgage rates going down. You said that our current mortgage rates are even lower than the last historically low rate that has been recorded. Do you think it could be the lowest mortgage rate ever?
ReplyDelete