Join Brian and David Wickert for inside knowledge on buying, selling and financing your home.
This week’s highlights:
- For the third time in the last few months, mortgage rates hit another all-time low.
- What does the supply of homes look like, both nationwide and in Wisconsin? You might be surprised.
- You have the right to rescind your home refinance — but think twice before you do.
Mortgage rates hit an all-time low
Once again, mortgage rates are the lowest we’ve ever seen them. Why? Well, home purchases stimulate the economy, and right now, the economy could use some support. Mortgage rates are directly related to world events, meaning that, due to all the uncertainty, they remain low.
- 3.15% on a 30-year fixed-rate mortgage with 0.8% in loan fees
- 2.62% on a 15-year fixed-rate mortgage with 0.7% in loan fees
**These rates are liable to change**
We get asked this a ton — “Will mortgage rates get lower?” Unfortunately, no one knows. What we do know is that it’s better to lock in a low rate today, and, if rates do drop again, refinance later on.
David put it like this: “Do not wait. It’s a sunny day NOW. Maybe it’ll be sunnier tomorrow, but that shouldn’t stop you from taking advantage of today’s weather.”
May 2020 housing market update: Nationwide and Wisconsin-specific
Earlier this week, Brain was reading the mortgage industry news, and stumbled across an interesting video called, “Economic Indicators Are Down, but Consumer Confidence Is Up.” Naturally, he was pretty taken aback. So, he dug into some numbers.
Consumer confidence is rated to be at 86.6, up from 85.7 in April — but before the pandemic, consumer confidence was at 130. So, comparatively, sure, we’re up from April. But we’re nowhere near pre-COVID confidence.
How does the housing market look right now?
We’re in peak homebuying season, with May being the #1 month of new home listings (followed closely by June). With the pandemic continuing to affect the market, most data points are down year-over-year, but supply and demand keep us in a hot market.
In the 5-county Metro Milwaukee Area:
- April 2020 listings were down 35.6% year-over-year
- May 2020 listings were down by 28% year-over-year
In America as a whole:
- Contract signings are down 22% year-to-date
- Contract signings were down 33% in April
According to David, the most interesting economical take on this is that, while demand has fallen, it’s still higher than the supply, keeping us in a tight inventory, with home values likely to continue to rise.
Rescinding a mortgage refinance isn’t always a good idea
Federal regulations from the Federal Trade Commission (FTC) stipulate that, if you choose to refinance your primary residence, you have three business days to rescind (or cancel), the refinance. So essentially, if you sign your papers on a Monday during a non-holiday week, you have until Thursday at midnight to take it back.
Recently, we had a client refinance his home, getting a triple whammy of a win: They lowered their rate to 3.15%, lowered their PMI substantially and were ready to save $400 a month with $0 in loan costs.
Sounds good, right? Well, the buyer wasn’t so sure. Within a day or two of closing, he gave us a call about rescinding. His reasoning was, “Well, I saw a 2.75% online somewhere. I think I can get a better rate with a new refinance.”
So, our fantastic Accunet Loan Consultant replied, “You’ve got the trifecta right now. You could rescind, but you’d risk losing the $400 in savings for a rate that might not even apply to you. Instead, consider keeping your current rate and savings, and we’ll keep an eye out for a better deal.”
Luckily, our client didn’t end up rescinding on his loan, and now we’re on the hunt for an even better deal.
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