by Maurie Backman | Oct. 12, 2020
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Despite low mortgage rates, many buyers think it's the wrong time to purchase a home.
When mortgage rates dropped to record lows back in July, it seemed like a prime opportunity for buyers. Then, in September, rates got even lower. In fact, for several months, it's been a great time to buy a home from an interest rate perspective. But only 54% of buyers think now's a good time to move forward with a home purchase, according to a new Fannie Mae survey. The question is: Are buyers being overly pessimistic, or might they indeed be better off waiting?
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The housing market has been grappling with limited inventory this year, and that's meant supply is lower than demand. The result? Homes are far more expensive now than they were a year ago. In fact, home values are up 6% from the previous year, according to data firm CoreLogic, and many buyers face bidding wars. As such, despite low mortgage rates, now may not be the ideal time to buy a new place to live.
There's also the state of the economy to consider. Many people have lost their jobs in the wake of the coronavirus pandemic. And those who are still employed may be dealing with income or job insecurity. If you fear you'll be laid off, it's wise to hold off on buying a home. The last thing anyone wants is to take on a new mortgage only to immediately fall behind on it.
It's easy to understand why only 54% of buyers think it's a good time to purchase a home. But what's the right choice for you? It may be an ideal time for you to buy if:
You may want to hold off on house-hunting if most of these factors aren't true for you. Sellers might change their tune if the health crisis improves next year. As such, it could pay to sit tight and wait for inventory to open up so you're able to get a better deal on a home. Perhaps your credit score needs work, you're iffy about your job, or you already have a lot of debt. If so, it pays to work on those shortcomings and then start putting in home offers and mortgage applications.
Of course, you may worry that by holding off on buying a home, you'll lose out on today's great mortgage rates. But the reality is that rates could stay low for quite some time. If you're not having luck in today's housing market or want to improve your finances, hang tight for a bit. You can always restart your search if you see mortgage rates begin to climb.
Chances are, interest rates won't stay put at multi-decade lows for much longer. That's why taking action today is crucial, whether you're wanting to refinance and cut your mortgage payment or you're ready to pull the trigger on a new home purchase.
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