The headlines last week had a familiar look to them, but in terms of what they actually signified for readers who might be potential home buyers or sellers in St. Cloud, they really should have triggered a snap-to moment:
“Mortgage Rates Fall to New 2016 Lows,” was the Star Tribune’s headline. Yahoo Finance echoed that, adding, “Is Now the Time to Buy?”
“Ho-hum,” readers might have reacted; “same ‘ol, same ‘ol…”
The so what? treatment was also what most media outlets gave the news. After all, haven’t mortgage rates been low for a long time now? So what if rates hit the lowest mark since May 2013? TV newscasters (cable and otherwise) were mostly mum, except on the financial channels. News is about what’s new—and this just didn’t seem to qualify.
In terms of real people’s lives, the actual impact of what those headlines mean is all but seismic. If you are selling your St. Cloud home, the number of potential buyers depends on how many people can afford to shop in your asking price’s range. Likewise, for serious house hunters, the real contenders are those that fit your budget.
That’s where the current St. Cloud mortgage rate picture is more than slightly interesting. It can be decisive. The impact that even small rate adjustments make are substantial—and that makes the current environment truly momentous. The average mortgage rate over the past 3 decades has been 7.49% (that’s what you get if you average out the official numbers since April of 1986). That means that a $300,000, 30-year fixed rate home loan would create a $2,095 monthly payment.
That’s why last week’s news should have been earth-shaking—at least to anyone on the fence about making a move in the current market. The official word from quasi-government entity Freddie Mac was that nationally, mortgage rates actually dropped again, inching down to a national average of 3.58%.
The math is remarkable. That same $300,000 home loan payment would today cost only $1,360—a savings of $735 every month. About a third. Put another way, on the same budget, the same St. Cloud house hunter could afford “a third more house.” In terms of any kind of shopping discount, that’s a wild one!
So I’d argue that there was actually a great deal of news value in last week’s drop in mortgage rates, whether the actual percentage shift was a small one. The news is that these incredibly low rates aren’t being treated as news—despite their importance to real people buying and selling real homes.
There is a danger in how people have the capacity to accept current conditions as normal—even if they’re extraordinary. That capacity has a downside: it means we can be lulled into acting as if today’s reality will continue on forever. History has a way of creating dramatic wakeup calls on that score…all of which is another way of suggesting why today is a terrific time to give me a call!