KNOXVILLE, Tenn. (WATE) — If you are in the market for a new house, or if you want to refinance your mortgage, now is the time to do it as mortgage interest rates continue to fall.
WATE 6 On Your Side’s Don Dare talked with a lending manager, who says current rates have been affected indirectly by the COVID-19 pandemic.
The Federal Reserve lowered interest rates again in response to COVID-19.
The Federal Reserve also purchased over $20B recently in mortgage-backed securities in an effort to support lending markets. What that means is mortgage rates are at some of the lowest levels in years, and activity has picked up.
Mortgage manager David O’Block says his office of 10 sales people at CMG Financial is having a busy month in originating home loans and refinancing existing home mortgages. In East Tennessee, the sale of homes is strong because mortgage interest rates continue to fall.
“In my 30 years in the financial business, I’ve never seen interest rates this low. We are at full capacity. Everybody is working 12-hour days.”David O’Block
The average sales price on a home in the Knoxville area is $250,000. Currently, 3.19% is the average rate for a 30-year fixed mortgage on a $250K home with 20% down, discount points are figures into this rate.
2.7% is the average rate for a 15-year fixed mortgage on that $250K home with 20% down.
“If you have a 30-year fixed, that interest rate could never go higher. So, you are guaranteed to lock in at a set interest rate for 30 full years. You could pay the mortgage down or you make minimum payments until you sell the house or pay it off. With an adjustable rate mortgage, with each rise so could your mortgage rate. That’s what happened in ’09, ’10 and ’11 during the recession.”David O’Block
At Coldwell Banker Wallace, Sales Vice-President Claudia Stallings says the latest figures show a big spike in closings and a big increase in houses under contract.
The housing market in East Tennessee remains strong despite the pandemic. Many of homes on the market are being purchased by young people or those who have not owned a home in three years.
Presently, the supply of homes for sale is low in our area and the demand is high.
“It’s a sellers market but it is also a buyer’s market because the interest rates are so low.”David O’Block
Financial experts believe mortgage rates will stay low for several more months as the economy struggles to regain the momentum lost to the coronavirus pandemic.
These are challenging times, but, if you’re looking to purchase a mortgage or refinance your existing one, now is the time to talk to a lender.
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