Should You Take the Real Estate Investing Plunge with Near-Record Interest Rates?

During the global financial crisis 2008, mortgage interest rates fell to unprecedented lows. At the time, experts believed that once those rates started to rise, it would be many years before Americans would have another opportunity to take advantage of record-low rates. Recently, though, interest rates have fallen to a record low yet again, and that means now is the perfect time to secure financing for a real estate investment loan.

Why Are Interest Rates Falling?

Current mortgage rates dropped to 3.29% during the first week of March 2020, then rose to 3.36% during the second week. This compares to a previous low of 3.31% reported in November 2012. There are a few reasons behind falling interest rates, but fears over coronavirus – more specifically, COVID-19 – have led to unexpected market movements in recent weeks. More specifically, the stock market retreat experienced in early March left investors scrambling into bonds, which are safer and far more stable than the stock market. Mortgage and refinance applications are on the rise, and people all across the nation are still taking advantage of the near-record low rates.

Should Investors Take Advantage Now?

For those who are new to real estate investing, and for those who have been eyeing properties or entertaining the idea of new projects, now is the perfect time to take the plunge. Concerns regarding the economic impact of COVID-19 only seem to be escalating, and when this is paired with the volatility of the current stock market, real estate investing is a wise choice. In fact, many investors have begun putting more funds into real estate than ever before as a way to hedge their stock market losses.

How Seasoned Investors are Using the Rates to Their Advantage

Across the nation, investors are starting to focus on more expensive real estate investments like luxury homes and larger apartment buildings rather than on small multifamily or even single family residences; this is because low interest rates on larger mortgages provide exceptional savings. In cities across the country, housing is scarce – particularly when it comes to rentals. Real estate investors who take advantage of today’s low rates and who invest in the right multifamily properties in the right areas stand to turn a significant profit – and all in a way that is far less volatile than today’s stock market.

How Long Will the Low Rates Last?

After dipping to an all-time low during the first week of March, rates were on the rise again the second week, which indicates the market may be starting to stabilize somewhat. Because of the many unknowns surrounding COVID-19, there is no way to be certain that the stock market will remain stable, and this makes it a very volatile investment for now. Experts predict that interest rates will continue to climb very gradually as long as all goes well with the stock market, but it is difficult to make such predictions with accuracy in the midst of a global pandemic.

Interest rates of 3.36% are incredibly low, so now is the perfect time to look into real estate investment loans, especially for investing in multifamily and luxury homes. Experts seem to agree that as the government works to ensure economic stability – including stability in the stock market – these rates are likely to continue climbing over the coming weeks and months.