It’s no secret that rates have been historically low recently. In 2020, rates broke more than a dozen record lows –in large part due to the pandemic. Those who weren’t afraid to relocate during such an uncertain time got some great deals. Deals they never would have gotten even five years ago. As far as interest rates were concerned, it’s been a game of limbo – how low can you go?

Inevitably, though, rates will start to level out ever so slightly and slowly – and home buyers and owners alike have taken notice and have shifted to act more quickly. According to the Mortgage Bankers Association’s seasonally adjusted index, mortgage applications to refinance a home loan recently spiked 20 percent compared to the previous week. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) increased to 2.88% from 2.86% the previous week for loans with a 20% down payment. (Diana Olick, 2021)

The booming refinance activity early in 2021 has caused a surge in mortgage applications to its highest level since March 2020, when the pandemic started. Mortgage applications to purchase a home also saw a sharp increase of 8% for the week, and were 10% higher than a year ago. (Diana Olick, 2021)

What does this mean for your clients who might have even the slightest “interest” in seeing what homes are available? It means that it could be time to act now before the rates jump higher.

From a home buyer’s perspective, the lower the mortgage rate, the more house one can afford. For example, say a $200,000 home with a 5% interest rate equates to a monthly payment of $1,800. If the rate is 3.75% instead, that buyer could then potentially afford a home in the $220,000 range with roughly the same $1,800/month payment. Or, they could choose to stay in the $200,000 price range and enjoy a lower monthly payment.

A lower interest rate also means less interest fees paid by the buyer over the full loan term. With the current state of rates, buyers can potentially save tens of thousands of dollars in the long run.

That’s the impact this has, and that’s why now may be the best time, in history, to buy a home.

But, also be cautious and explain to buyers that interest rates are just one factor in the process. Credit, capital, and income also play a very important role. Lower interest rates – and the low housing inventory we’ve discussed many times – also means more competition in the marketplace, which will be another factor that can impact the process.

So, if you know any clients who you think might be interested in at least taking a peek at your listings, now might be the time to reach out. While it’s not a certainty that they’ll jump at the opportunity to buy, they’ll at least appreciate your willingness to keep their best interest at heart.

*Not all borrowers will qualify. Contact us for more information on fees and terms. Not intended as legal, financial, or investment advice. Contact your financial representative for more information.

Diana Olick. (2021, January 13). Mortgage refinance demand spikes 20% as borrowers fear missing out on record-low rates. Retrieved January 22, 2021, from