Predicting where the market will go is always going to be a challenge, but in this market, where industry inventory is at record lows and mortgage rates are also at historic lows, buyers will always need to live somewhere.
The other factor that is driving this real estate market is the exodus or the migration away from densely populated areas is continuing. There are some parts of the country where inventory is so short that properties don’t last more than a couple weeks on the market. In the Northeast, especially in New Jersey, there is increased demand for properties away from the densely populated five boroughs of New York City.
The decision of the Fed to keep interest rates where they are is clearly going to keep the market in a position where buyers will be continually challenged to find a home that meets their needs.
The average 30-year fixed-rate home mortgage is at a record-low of 3.33% according to Bankrate. This incentivizes people not only to become more aggressive in their home search but also become more aggressive when considering budgetary constrictions.
Getting a low interest rate can actually translate into a monthly saving of up to $200 a month.
But because of the collapse of the U.S. GDP for the last quarter which fell by over 30%, with banks very reluctant to be quick to approve new loans.
The average credit card rates are still relatively high, with credit cards charging over 16% interest even though the Fed rates are barely above 0%. Car loans are being written at a bank loan rate of 4.24%.
Clearly banks are very uncertain about the climate for this new borrower. The entire economy is waiting to reopen, so banks are clearly waiting to see how the economy fares over the third and fourth quarter of 2020.
Good thing for students heading back to school is that they will be paying a lower interest rate for their student loans, according to Bankrate.
According to a MarketWatch story, banks are going to lean heavily upon fee-based income rather than interest charged on loans.