Mortgage Tips: The Benefits of Low Interest Rates

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A Look at Interest Rates Historically 

Since the housing crisis in 2008, we’ve seen the lowest interest rates in history. However, this wasn’t always the case. Over the past 50 years, mortgage rates have reached as high as 19 percent, in 1981, and as low as 3.31 percent in 2019, for a 30-year fixed rate mortgage. Since their peak in 1981, rates have steadily declined, giving homeowners more buying power than ever before.

As it stands, 60 percent of mortgage holders today pay rates between 3 and 4.9 percent, according to Freddie Mac’s Primary Mortgage Market Survey. There are benefits for both buyers and sellers entering the Orange County housing market at this low rate, however careful navigation of current housing trends, including fair market value pricing, is important for finding long-term success.

Benefits of Entering the Orange County Housing Market at a Low Rate

Benefits for Sellers

Since August of 2012, we’ve been in a seller’s market. That means there are more buyers entering the housing market than sellers. Combine that with historically low interest rates and it’s easy to see why now is a good time to sell. This gives sellers a strong negotiating position, but only if they’re willing to price their home properly. As a seller, being overconfident could be your downfall in this market.

Currently in Orange County, homes coming on the market above fair market value for most price ranges are typically spending more time on the market, resulting in price reductions and less buyer confidence. Conversely, homes that are priced at fair market value, properly staged and marketed by an expert local real estate agent are moving fast and contributing to an overall increase in buyer demand. Despite the seller’s market and low interest rates, proper pricing and expert help are still the keys to finding success.

Benefits for Buyers

Despite the statistic skew towards favoring sellers, there are still benefits for buyers to enter the market at these low interest rates as well. First and foremost, as a buyer, your buying power has increased significantly over the past decade. Interest rates are still at historic lows. With each quarter of a percent decrease in value, the home you can afford increases by 2.5 percent. With more purchasing power, you’re able to afford more home while paying the same mortgage.

If you were to enter the market today, interest rates are around 3.75 percent for a 30-year fixed mortgage. There are also more programs than ever before that encourage first time homebuyers to enter the market from 0 percent down payment programs to different mortgage structures allowing buyers to find the right fit while taking advantage of these low interest rates.

Find a Home in Orange County

With interest rates at an all-time low, there’s no cause for hesitation. Rosemary Hieber can help you find the right home for you while helping you take advantage of low interest rates. Whether you’re looking to right size your home, purchase for the first time or buy your next property, Rosemary can help. With $275 million sold locally and personally, she is the #1 Agent for Coldwell Banker Residential Agent in Ladera Ranch and the #1 Agent for the Coldwell Banker Laguna Niguel office for 2018. She has been helping people properly price and sell their homes for more than 20 years, and knows how to navigate the South Orange County market. Contact her today to discuss your buying and selling options in Orange County.

Pictured Listing: 12 Craftsbury Place, Ladera Ranch offered at $1,100,000



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