The U.S. housing market is booming, and it’s all thanks to low interest rates. According to the National Association of Realtors, existing home sales hit an all-time high in July 2020, with 5.86 million homes sold. This is a 14.7% increase over the previous year.
The main factor driving this surge in sales is the record-low interest rates. The average rate on a 30-year fixed mortgage is currently around 3%, which is the lowest it’s been since 1971. This has made homeownership much more affordable, increasing demand and pushing prices up.
Low interest rates have also made it easier for people to refinance their existing mortgages. According to the Mortgage Bankers Association, the number of refinance applications has surged to its highest level since 2012. This has allowed homeowners to take advantage of the low rates and lower their monthly payments, freeing up cash for other uses.
The low interest rates have also helped to fuel the housing market recovery. The Federal Reserve has kept interest rates low in order to stimulate the economy in the wake of the COVID-19 pandemic. This has resulted in increased consumer spending, which has helped to drive the housing market forward.
The low interest rates have been a boon for the housing market, but it’s important to remember that the market is still fragile. The pandemic is still having a major impact on the economy, and it’s unclear how long the low rates will last. It’s important to be mindful of the potential risks and make sure you’re prepared for any future market fluctuations.
Overall, low interest rates have been a major factor in driving the housing market to an all-time high. The low rates have made homeownership much more affordable, and allowed people to take advantage of the low rates to refinance and free up cash. However, it’s important to remember that the market is still fragile and the future is uncertain.