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Mortgage rates and refinancing post COVID-19
The Coronavirus has impacted the world in so many different ways, however many will be feeling it in the pocket and their bank accounts the hardest. With many having unfortunately lost their jobs, there has been less money around which has impacted the overall economy all over the planet, not just in the United States of America. Those without money will have been stressing and worrying about the bills that they have to continue to pay and the potential consequences that may arise if they default or fail to make a payment on things such as rent and mortgage rates.
Mortgage and refinancing rates plummet to historic lows
However, if there is anything that can be considered rather positive out of this pandemic, then it is the rates that mortgages and refinancing have, as these have plummeted to historic lows, something that can be seen when using mortgage loan calculators. Indeed, getting a mortgage or refinancing was initially a rather tough challenge and one that was only made further difficult in the early stages of the COVID-19 crisis; however things have since changed. In fact, those that are still fortunate enough to have stable employment and qualify are able to access some of the lowest rates in financial history now.
According to data, the lowest weekly mortgage rate on record stood at 3.13% back in 2012, however lenders are now posting rates at just 2.5%, with those who are currently in the position to refinance or even buy property having seen their affordability factor soar.
Is COVID-19 the sole reason for mortgage and refinancing rates to be so low?
It may, though, be a little too simplistic to suggest that mortgage rates and refinancing rates have solely dropped because of the impact that COVID-19 has had, as many of the rates had been falling in 2018; well before anyone in the world had ever heard of Coronavirus.
In fact, it could be argued that it is a little surprising that the rates have not shot up instead of continuing to go into freefall. Indeed, with many out of work and unlikely to be able to keep to a payment schedule to repay the mortgages and refinancing that they take out, lenders took a tighter approach to lending money and initially made it difficult for anyone to borrow.
The exact opposite happened to what many may have expected
But, a sudden influx of applications because of the low rates on offer meant lenders would remain willing to loan out money once again, although under stricter and tougher measures and terms for the credit that they provided. According to some, JP Morgan Chase required a deposit of 20% as well as a credit score of 700 to even consider an application. Indeed, in many ways, COVID-19 should have made it a lot harder for those looking to get the best mortgage and refinancing rates possible, however the exact opposite happened. Indeed, it became rather affordable despite the economic pressures, with many now feeling that they are actually in a better position than before.
This article does not necessarily reflect the opinions of the editors or management of EconoTimes