Take the green light now if you are going to refinance or purchase a home

It’s been a wild week with a massive selloff on Wall Street. With the concerns over the global economic impact of the Coronavirus during the past week, the Dow Jones is down 4,000 points, marked by record one-day losses.

Wall Street had reached record highs, and all it took was a global fear to trouble the markets and create a huge reversal. All 11 S&Ps were in correction this week, with the major averages down 12% this year to date, and stocks are on pace for the worst week since the financial crisis...not good news for the Dow, which is on pace for the worst month since 2009.

The 10-year Treasury Yield hit a record low of 1.17%, which is hard to believe, and the two-year Treasury Yield spiked down to .939%.

There is certainly lots of doom and gloom in the markets, no matter what station you listen to. Amid the market, route traders seem to be pricing in rate reductions in the coming months. When you look at the Fed Funds Futures market, it is showing a significant chance of a rate cut at the Federal Reserve’s next meeting, scheduled in March.

The problem is the Fed is not in a position just to drop rates and stop the potential spread of the Coronavirus. However, they are in a very precarious position, considering the fear out there could create a global equity correction.

So, what happens when the corona outbreak worsens? Investors flee equities and lean towards treasuries for a safer haven. But look at the rates: They’re awful, at best.

For investors and real estate, there are some positives for all of this. If you’re an investor, once the dust settles a bit, it’s an opportune time to deploy some cash into the market at a discounted rate. IRA contributions and 401(K) contributions would be an excellent move to deploy cash if you’re young and have time to weather the market. Would you rather purchase the market after it’s dropped 4,000+ points in a week, or would you rather have bought it at the top a couple of weeks ago?

But keep in mind that this virus could expand the fear and make the market drop even more in the coming weeks. No question this worldwide virus will have a major impact on worldwide corporate earnings, which again will impact the stock market in a negative way moving forward.

Likewise, for real estate investors, first-time home-buyers and homeowners who are considering refinancing, if you are going to take the plunge, there is not a better time to take advantage of favorable interest rates, now that the green light has turned on.

I have never seen the 10-year Treasury Yield this low, and I have been in this business for 43 years. What does this mean for the interest rate to finance a home? On Fox News this morning, it indicated that the 30-year fixed-rate mortgage was down to 3.29%, and the 15-year fixed-rate mortgage was at 3%. This is obviously created by the turbulence in the market and the low Treasury Yields. What it means is it could add up to considerable interest rate-savings for homeowners today.

Like all good things, markets fluctuate, and who knows how long this window of opportunity will stand when the long-term forecast is unpredictable? I do know one thing: These are wicked low rates, and even though our sales prices have moved up in the market in recent years, these lower rates will help to offset some of the increases.

When you compare this market to 1981, I can remember we were quoting 17-18% variable interest rates with a 5% cap over the life of the loan, which meant the price could increase to a maximum of 23%, and you could not get a fixed-rate mortgage. The rates were worse than putting it on a credit card, and consumers were still purchasing, even though it seemed you were going over a cliff.

Fortunately, consumers were able to refinance in future years. That’s why I'm telling everyone now that you cannot get a better time to refinance your property or considering the attractive rates when purchasing a home or second home in the Lakes Region. Out of all this doom and gloom, there are openings in the clouds. Please take advantage of the sunshine and turn it into a better day.

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Contact Frank at 603-279-7046. Visit www.rocherealty.com to learn more about the Lakes Region and its real estate market.