A recent pandemic has given lenders the jitters. With mortgage rates rising, more and more homeowners are refinanced their mortgages to take advantage of lower rates. However, some lenders are concerned about the increase in pandemics these days. They’re wary of how much it will cost their clients, especially if there is an outbreak in the area where the home is located. That’s why they’re pushing for a refinance at the first chance they get. The fear of refinancing during a pandemic comes from lenders’ worries about re-pricing a property or not getting paid for services rendered if there is an outbreak in the area where an existing home is located. Fortunately for those looking to refinance, today’s market seems to be relatively calm and stable right now, especially with government programs designed to help vulnerable homeowners stay in their homes without having to pay more than what they can afford. Thus, here are some of the reasons why people are refinance during a pandemic:
1. Interest Rates are Increasing
Many people refinance during a pandemic because interest rates are increasing. At the moment, mortgage rates are at a near-historic low. In fact, they’ve been this low since 2008. Typically, the lowest rates are during a recession, when many people are looking to refinance. That’s because people refinance when rates are high, because they hope to lock in a lower rate. But with rates this low, many people are looking to refinance and are making it easier to do so. That means there are more people looking to refinance than before. That’s why some lenders are pushing for refinances at this time.
2. Home Value is Stabilizing
Home values have been on a steady decline since the peak of the market in mid-2016. And with so many mortgage rates at historic lows, it’s only a matter of time before they rise. That means that many homebuyers are looking to refinance now and lock in a lower rate when rates rise. That also means that home values will likely stabilize and will likely start increasing again in the near future. But if you’re looking to capitalize on the value of your home, refinance now.
3. Investors Are Flocking to the Market
Buying a house is traditionally the domain of first-time buyers. But as home values have fallen, more and more people are buying houses with the intention of renting them out. That is a lucrative market, especially since rental rates are dropping as well. That means that house prices are attractive to investors, who are willing to buy houses and rent them out as well. Investors often refinance during a pandemic, because they’re looking to lock in a lower rate and also get financing faster. As more people are renting now and more investors are looking to enter the market, there are more investors looking to refinance. That means more refinances are happening, especially during a pandemic.
4. Refinancing Can Be a Diversification Strategy
One of the reasons why so many people refinance during a pandemic is to diversify your portfolio. That’s because investing in stocks is risky, especially when the economy is as uncertain as it is now. That means that people are turning to bonds and other conservative investments, like real estate. That’s especially true during a pandemic, when the government may intervene to help vulnerable homeowners stay in their homes. That means that people are looking to lock in gains from real estate, which is a diversification strategy. In times like these, it makes sense to invest in something that normally doesn’t offer you returns, like a home.
There are many good reasons why you should refinance your mortgage during a pandemic. They are increased interest rates due to the economy, lower home values due to the economy, increased rental rates due to the economy, increased demand due to government intervention, and a diversification strategy. During a pandemic, it’s best to refinance your mortgage and lock in a lower rate.
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