Stock market fears about the coronavirus have helped push mortgage rates to near all-time lows, which local lenders say gives Baton Rouge homeowners who refinance an opportunity to lower their monthly bills.
The yield on the 10-year U.S. Treasury is nearing 1%, and mortgage rates have fallen about a full percentage point over the past year. Moreover, the Federal Reserve cut its benchmark rate this morning to a range between 1% and 1.25%.
“If there was ever a time somebody was looking to do home improvements, take equity out of their home, purchase a home or reduce their rate, get off the fence and do it now,” says Kenny Hodges, president and CEO of Assurance Financial.
Rates on a 30-year fixed mortgage have dropped from about 4.5% to around 3.5% over the past year, which effectively makes the same-priced house from a year ago more than 10% cheaper today in monthly mortgage payments.
Hodges says Assurance Financial had its largest-ever lock month in the company’s 19-year history in February, with Monday marking the company’s single-largest lock day ever, breaking its previous one-day record by more than 25%.
“If there is a silver lining to the coronavirus, it’s that it’s created an ideal time for people to either refinance their mortgages for great rates or purchase a new home,” he says.
Furthermore, as purchasing season begins, the sharp drop could also give prospective homebuyers a chance to afford the house they’ve been eyeing.
Tee Brown, president and CEO of GMFS Mortgage, says refinancing makes sense for local individuals planning to stay in their homes for a long time, noting they now have the chance to save several hundred dollars a month by either going from a 30-year mortgage to a 15-year mortgage, or by refinancing their entire 30-year mortgage.
“Evaluate where the interest rates are and what you can qualify for, and take advantage of these historically low rates if it economically makes sense,” Brown says. “Get a free quote and see what you might be able to accomplish.”
GMFS has seen a 100% increase in locks over the past two weeks, says Brown, rising from about $300 million in locked rates a given month to $600 million amid the coronavirus outbreak.
If the 10-year Treasury declines even further, mortgage rates could drop more, too, though they don’t always follow the government benchmark exactly.