Any real estate agent should be updated when facing a potential home buyer or investor. So we’ve been working on a kind of report for you to know the forecast and last events on the real estate financing market.
A lot of homeowners have recently come to us willing to refinance their mortgages, hoping to save more money on their monthly payments. That happened because the average contract fixed-rate interest for mortgages of 30-years went down to the lowest level since November of 2016, arriving at 3.93% during August. That drove to an increase of 37% in refinancing volume, which is the highest level achieved since three years ago.
Last July, the Federal Reserve has also lowered interest rates “by a quarter percentage point to a target range of between 2% and 2.25%”, according to Markets Insider. That means monetary policies are now empowering customers to spend more, while businesses are able to do more investing. Market application volume for mortgages had seen un upgrade of 21.7% first week in August compared to the last week of July. We have seen the impact. Homebuilding shares have been boosted by these lower interest rates, and are close to achieving the highest levels of this year. Lennar, our Miami-based homebuilder partner, has seen its stock risen by 32%. And when we talk about lower interest rates, we are describing a situation similar to late 2016. It’s now cheaper for everyone to buy and refinance their houses. Financing is now cheaper for developers, also.
What’s best, market watchers are predicting a new drastic drop in interest rates. This means not only homebuyers can plan ahead but also businesses that, with lower borrowing costs, can think about expanding or growing more quickly and generating bigger profits. So here’s some advice for investors to make the most of this scenery. Be sure to share it with your real estate clients.
5 ways to increase returns for investors in lower interest rates scenery
- Consider changing your bank savings account into an online savings account, which can provide you a major interest and increase your cash account returns.
- Do you know about preferred securities? They are hybrid investments that work similarly to stocks. As they have more risk, they also provide higher relative yields, similar to corporate bonds.
- Invest in real estate for leasing. This way you can diversify, creating long term income and capital appreciation. You can take advantage of low mortgage rates and access up to 70% financing if you’re foreign or 90% (commercial real estate) or 97% (residential) if you are national. Click here to prequalify.
- Check out emerging markets stocks. While nowadays you can find stocks at bargain prices, you could be looking at a future dividend income about to grow. It’s likely at some point some of these stocks may revert.
- Seek out high-income stocks or chase those undervalued that with a greater risk, in long-term could be providing you with also greater profits.
Once you’ve shared this information with your real estate clients, you won’t only be trusted but also considered as a reference when it’s time to invest. Be a realtor on-trend, stay up to date on our blog.