One positive of the current Covid-19 situation for home buyers is their current buying power. While the lending market is tight, borrowers who qualify are certainly enjoying lower payments today as compared to two years ago. The chart above shows an example of a $250,000 purchase with a 10% down payment. Two years ago the PI (principal and interest) payment would have been over $1100/month, while today it is below $1000/ month. That is some nice savings and means buyers can either save a little monthly in today’s market, or they can afford a little more house.
Another side effect of the pandemic is the uncertainty, which is giving buyers a bit more power. In recent years, the market was definitely a sellers market. Inventory was incredibly low and sellers could just list their home and sit back and watch the offers roll in (particularly in the non-jumbo market). Today, given the uncertainty, sellers have lost some of their confidence as they aren’t sure when the buyers will be back out in full force.
At the beginning of March, in the Charlotte area, home prices were up over 4% annually. With the uncertainty caused by the pandemic, by April, prices were up just under 1%. That is the slowest growth we’ve seen in the area for years from a price growth standpoint.
One complication created by the rate cut has been the rush to refinance. This initially overwhelmed the lenders, but has settled some. Now, lenders have tightened up their guidelines. Higher credit scores are necessary to qualify, and employment verification is taking place just before closing. Appraisals can take a bit longer than normal as some appraisers are choosing not to go inside homes, and some sellers too. This article has some great info about whether refinancing makes sense – I am not affiliated with this company, but I thought the info was good: /https://www.consumersadvocate.org/mortgage-refinance/when-to-refinance-mortgage
If you can qualify for the mortgage loan, this rate cut combined with the current seller uncertainty makes this an attractive time to buy!