While many industries have been hard hit by the pandemic, the record-low interest rights that have come as a side effect of the COVID-19 pandemic have translated into a boom for the mortgage industry.
The average rates for a 30-year fixed-rate mortgage reached 2.81 percent last week, “the lowest rate in our survey’s history which dates back to 1971,” according to Freddie Mac’s Primary Mortgage Market Survey.
Freddie Mac Chief Economist Sam Khater said the rates are providing potential opportunities for those positioned to take advantage of them.
“Low mortgage rates have become a regular occurrence in the current environment,” he said in a written statement. “As we hit yet another record low, the tenth record this year, many people are benefitting as refinance activity remains strong. However, it’s important to remember that not all people are able to take advantage of low rates given the effects of the pandemic.”
And the Pasadena area has been no exception, according to Delwara Pacific mortgages President Waleed Delawari.
Through home purchases, and especially refinancing of existing loans, mortgages have been “easily up 100 percent since last year,” he said.
“It’s been pretty busy for a few months,” he said. “There’s just been an enormous influx.”
“There’s been such a demand, there’s actually a major capacity issue going on across the nation,” Delawari said. “Lenders can’t maintain the amount of transactions.”
Adam Bray-Ali of Coldwell of Coldwell Banker Realty in Pasadena shared a similar view.
“So the pandemic has been an absolute boon in the mortgage industry, both locally and nationally,” he said. “We’ve had a tremendous decline in the interest rate or mortgage loans, and we’ve had an opportunity for millions of households in America to refinance their loan.
“And it has also been an extremely big part of the push that we’re seeing, driving demand for people buying homes,” he added. “A lot of people that have been thinking about purchasing a home are now acting on it in part because of the very low interest rates that we’re seeing. And that’s kept lenders very busy.”
Mortgage rates often provide a glimpse into the financial future, according to Bray-Ali.
“Right now, what’s happening is that with low interest rates and a low number of houses on the market, it shows that we’re likely going to see stable-to-increasing prices for sales,” he said.
“If you’re trying to purchase a home, you should expect that the price will remain the same or even go higher. If you’re a home seller and intend to sell your home, you should know that at least for the next several months, interest rates are likely to remain low and probably for longer than that, which means that more buyers will be able to afford to purchase the home that you’re selling,” Bray-Ali said. “If you’re a homeowner who intends to keep your property, now would be a phenomenally great time to refinance the loan into a fixed term mortgage that would likely reduce your carrying costs or your monthly living expenses.”
But he cautioned that those who have taken forbearances on existing mortgages or have fallen behind on rent may have difficulty obtaining a new loan.
“Lenders are asking borrowers to prove that they have paid their rent for the last 12 months because there have been issues where people are just simply not paying their rent,” he said.