Don’t apply for a refinance until you listen to this podcast! - Avoiding Real Estate Turbulence - Episode 28
Hey everybody, welcome to Avoiding Real Estate Turbulence Podcast. This is your pilot, Jon Lafferty with Century 21 Town & Country.
And copilot, Tony Abate, with Ross Mortgage, and we are your real estate pilots. Our job is to be your real estate advocate, and also make sure you're educated about the buying and selling process. We'll keep you informed throughout, until we get you safely closed.
In a real estate transaction, there are many reasons why you can encounter turbulence. Today, we are going to talk about something that's pretty prescient in today's news: refinancing, interest rates. Tony, I have a lot of clients that are starting to ask me whether or not this may be a good time for them to refinance, and what things they should think about, and how do they know if the rate that they're getting is worth it, and how much should an interest rate be less than what they're currently financed at to make it worthwhile? All those kinds of questions I get, and I don't know what to tell them so I always send them your way to talk to you about it. Maybe we can talk a little bit about that today, and maybe shed some light on the whole process.
Yeah, well thanks for that, Jon. Yeah, interest rates are really attractive right now. Contrary to what all the pundits were projecting at the end of 2018, interest rates are very, very favorable, and there's predictions that they're going to reach all-time lows in the relatively near future.
What would be an all-time low?
Gosh, so 30-year fixed rate loans in the low-3% range. We kind of bottomed out in the three and a half range a couple years back, and we're close, we're in the high threes right now. There's a lot of signals that are suggesting that that's going to happen. Whenever this happens, the chatter about refinancing certainly picks up, and you certainly see the advertisement, the blanket statement, "Now is the time to refinance." To your point, I would say, sometimes it is, and maybe for some people it is, but it takes an analysis, just like anything else does. The opportunity is there, interest rates are very favorable right now.
The thing that I would advise relative to that is, when interest rates do go down, they can be fleeting. When the experts are projecting that interest rates are going to go down, they never go down in a nice, convenient, linear, straight line. It's a bumpy ride, and in fact, even though there's a lot of chatter about low interest rates, over the course of last week they actually increased by about 0.25%.
How does that happen?
In the course of a week's time, that's pretty extreme. The predominant trigger most recently had to do with the talk about the tariffs, are they on, are they off, are they good, are they bad?
Wait, tariffs affect interest rates for people to get a mortgage loan?
Yes, they do. I'll even go one step beyond. The talk of the tariffs affect the interest rates, they don't even have to be there, it's just the conversation about they're coming, or we're thinking about it, or, "Hey, watch out China," whatever the case may be. Interest rates are always a function of the strength of the economy, and one of the overriding things that's thought about right now is that as tariff activity increases, there's suggestion that that'll be good in the long run, but in the short run it's going to pinch the economy.
Avoiding Real Estate Turbulence
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