What Covid-19 Means When Talking Mortgages
The Coronavirus isn’t only wreaking havoc with humanity’s state of health; with the World Health Organisation moving ever closer toward changing its tune about Covid-19 not yet qualifying to be called a global health pandemic; the literally viral global diaspora of the virus is also now beginning to eat away at the world’s most vulnerable economies. Developing countries are hardest hit and fears regarding a general incapacity to contain the virus on the parts of poorer countries continue to run rife.
But the poorest of the poor aren’t the only ones trying to dodge the effects of the coming inevitability. The United States Federal Reserve on Tuesday confirmed a major cut to short short-term interest rates in a pro-active attempt to protect the local economy from the effects of the global crisis. And even though none of the above is the result of anything good, the half-percentage point interest relief may actually be a positive thing for those in the market for a new mortgage.
Stimulating The Market
And that’s exactly what the Fed is hoping for. The lower interest rates will without a doubt temp potential homeowners to venture out and shop. Even so, the possibility does exist that folks will be less likely to venture out in order to look for a new home for fear of possibly contracting the virus.
It’s not even as if mortgage bonds are directly affected by Fed-imposed interest-rate decisions. But the fact that mortgage bonds are affected by everything from urbanisation to lenders’ concerns to the general direction of the bond market is yet another confirmation of the immense knock-on effect of a single element on the entire market.
And the Coronavirus effect is no exception.
From A Different Angle
But the negative effects and market concerns aside, when focusing for a minute on the positive turns in the markets, there are definite ways in which to benefit from the cut to short-term interest rates, and by default, the current mortgage bonds climate.
When buying a new home, in any market climate for that matter, the biggest challenge is usually a lack of options. Basically, the demand is bigger than the supply. There simply aren’t enough homes in order for everyone to own at least one. But with that having said, now is the time to strike the iron as at present, it’s just about as hot as its going to get.
For Your Consideration
So, what to do now that the market is smiling upon anyone wanting to either refinance an existing property or buy a new home? Here are a few pointers that anyone in the market for a new home may want to take into consideration:
- Be sure to get a mortgage pre-approval letter from a recognised and registered financial institution or bank. A pre-approval letter will indicate to a seller that a purchaser is “good for the money” and that the process will not be a waste of time.
- Limit special demands or contingencies. Don’t request small special favours from the seller unless its really necessary. When the markets come out to play ball, the cosmetics shouldn’t be permitted to feature too heavily.
- Be as flexible as possible regarding a possible close-of-sale date. Do unto others, and all that.
Follow these 3 simple steps and you may very well soon become a proud new homeowner in a market currently 110% on the side of the buyer.