2020 has proven to be a difficult year for us all in one way or another. However, you might be finding yourself in a better situation if you are on the market to purchase real estate. Current interest rates are hovering low due to the weaker economy.
What effect do interest rates have on real estate prices? Keep reading to learn more!
What Influences Mortgage Interest Rates?
Firstly, a mortgage interest rate will depend on personal credit history and finances. If your credit score is low, you will not be getting the best interest rate because it is riskier for lenders.
As previously mentioned, our current weak economy has caused interest rates to decrease. This is because there is a lower demand for mortgages. Decreased demand puts downward pressure on lenders.
The Federal Reserves’ monetary policy has a huge influence on interest rates. They do not set the rates, but their actions greatly affect them. Adjusting the money supply and the Fed Funds rate has a large impact on the available rates.
Housing market conditions also play a role. When there are lower inventories of real estate available, rates tend to go down. Overall, mortgage interest rates follow the basic concepts of supply and demand.
Due to the current events, it is important to find a lender who is easy to work with and cares about you. Financing may take longer due to the more intense qualification processes.
Low-Interest Rates Influence Real Estate Prices
So, then what effect do low-interest rates have on real estate prices? In theory, this should bring those more expensive properties into the reach of some buyers. A lower interest rate means lower monthly payments which expand purchasing power.
This is a win and a loss because it increases the competition for buyers. With more people looking and with more purchasing power, there could be multiple offers on a piece of real estate. This also reduces the number of homes for sale, taking away a variety of options.
In the end, this could drive up real estate prices due to long negotiations and multiple offers. Sellers understand the real estate market and can take advantage of this in some ways.
Is It a Good Time to Buy?
In terms of purchasing power, it is a great time to buy. With the other factors in mind, it is important to be aware that you may be facing some fierce competition. This is an even bigger indicator that people are taking advantage of these lower rates.
With a good real estate agent, you can win in a market like this! Plus, there are sellers out there who want out of their homes quickly due to the many changing factors in our lives this year. This makes the process even smoother. Good negotiation goes a long way with competition like this.
Using Low-Interest Rates to Your Advantage
If you have ever thought, “my dream house is almost within reach,” then you might be there. These low-interest rates can provide you with the real estate that you have been hoping for.
Contact us today to get advice from expert agents on how to win in the Staten Island real estate market!
Wonica Realtors & Appraisers are Staten Island’s #1 independent full-service real estate firm, serving the needs of the community for over 30 years. Whether you’re buying, selling, renting or relocating, our staff of highly trained professionals will provide quality realty services with personal attention to your individual real estate needs.