COVID 19, Interest Rates, and the Housing Market

I hope you are all staying safe and healthy. As your trusted real estate advisor, we wanted to give you an update on how COVID 19 is impacting mortgage interest rates and the housing market.

There are some misconceptions about the Fed rate drop that occurred on Sunday. The Fed did drop the Federal Funds Rate, but that rate does not directly impact mortgage rates, other than Home Equity Lines of Credit. Mortgage interest rates did not drop to zero percent. Mortgage rates can adjust frequently because they are based on bonds that are traded thousands of times a day. Conversely, they Fed only meets eight times per year to consider changing the Fed Funds Rate. While there is not a direct relationship between the two rates, the behavior of longer-term rates like mortgages can often predict the market conditions that prompt the Fed to make a move. Often times we see a drop or increase in mortgage rates before the Fed meets to consider an adjustment of the fed rate. In this case, mortgage rates dropped last Monday and then continued to increase throughout the week. Rates are still at or near historic lows. If you are interested in purchasing a home, or refinancing, it is important to connect with your loan officer to get them all of the required financial documents they request. That way they can do their best to time the rate lock if they see it trending lower.

Okay, onto the housing market itself. At the moment, buyers are still buying and sellers are still selling. Buyers are looking to take advantage of the low interest rates mentioned above, and sellers want to take advantage of that increased buyer activity. Sellers also had a reason they were planning to sell, and more than likely, that reason has not changed.

While the real estate market is continuing to move forward, it is important to take responsible precautions around COVID 19. We are advising our sellers to wipe down door handles before and after showings if they occupy the home. For buyers, we are recommending that we each drive in separate cars to view homes and they use hand sanitizer before and after viewing each property.

As always, we will be here for you. Please let us know if you have any additional questions or concerns. You can reach us at the office at 520-777-6787 or at Hello@EllTucson.com.

Take care.

Jeff Ell, Associate Broker
Ell Group at Keller Williams Southern Arizona