business matters

Low rates

The good news for Butler County home buyers is that interest rates for 30- and 15-year fixed rate mortgages are at historic lows.

The bad news is there aren’t a lot of houses on the market in the county.

Interest rates in mid-November were touching 2.75% for a 30-year mortgage and 2.375% for a 15-year mortgage, according to Robin Caruso, a mortgage lender with Howard Hanna Mortgage Services with offices in Butler and Cranberry Township.

Caruso said, “These are extremely low rates. What they do is give more buying power to the home buyer. Money is so inexpensive to borrow these days.”

The time to borrow

According to Anne Westbrook, associate broker at Berkshire Hathaway, 251 Grove City Road, Slippery Rock, “They are the lowest they’re ever been since I’ve been in the business, and I started in 1986.”

“A year ago, the interest rate was 4%, and people then said they wouldn’t go any lower, but here we are,” said Westbrook.

Bill Hershman, the senior lending officer with the Armco Credit Union, 101 Hollywood Drive, said, “It’s bounced back a little bit, but if you look back to 1974, mortgage rates were at 16 to 17%.”

“The long-term average mortgage rate has been averaging 6 to 7% and we’ve been below that for many years,” Hershman said.

But while purchasing a house has never been cheaper, refinancing a mortgage or taking out a home-equity loan has been getting more expensive.

Hershman said lenders such as Federal Home Loan Mortgage Corp. are adding 1.5 percent to the rate to refinance a house, bumping the interest on a refinancing to around 4 percent as a way to brake the flood of consumers looking to refinance their homes.

Hershman said, “We’ve been cranking them (refinance loans) out like crazy, but now that school has started back up, things are slowing. It seems to be a cyclical thing.”

Caruso said the lower interest on mortgage rates is a function of the stock and bond markets.

She said when money flows into the stock market, the bond market goes down which sends interest rates up. When money starts flowing back into the bond market, interest rates drop.

As to what is driving interest rates to unprecedented lows, Westbrook said she couldn’t hazard a guess.

Better act now

But she did guess they wouldn’t be staying the same for long.

Westbrook said, “I think they are going to stay another month or so as soon as we see what shakes out with the election.

“I’m going to guess they will start to change by the end of the year,” she said.

Unfortunately, Hershman said, you may get a great interest rate on your mortgage and still have trouble finding a house to buy.

“I’m not a Realtor but form what I understand, there is a shortage of houses for sale right now. There are a ton of buyers because of these rates make it so much cheaper to buy a house,” said Hershman.

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And the shortage of houses for sale, like so much else in 2020, is partly the result of the COVID-19 pandemic.

People are reluctant to put their homes on the market because they do not want strangers coming into their homes for a tour or an open house.

According to Caruso, orders to shelter in place reduced the number of viewings and open houses home sellers were willing to have.

No one wanted potentially infectious strangers in their home, she said.

For the same reason, real estate appraisers are forbidden by owners from entering their homes.

The result is the housing market is pretty tight. There are more would-be buyers than sellers. Hershman said in some communities the price of homes has risen 15% from last year.

“That’s the hallmark of tight supplies,” he said.

Westbrook said, the number of houses available for purchase in Butler County right now is “slim to none.”

“Our inventory is at an all-time historic low. Everyone’s looking for a house, but there’s nothing out there,” she said.

Hershman said, “It’s a sellers market. If you want to sell your house, do it now.”

Caruso said, “It’s definitely a sellers market. People have been receiving multiple offers for their homes and offers above the listed price since April.”

That’s because more and more people are hoping to buy in Butler County lured here by the low taxes, said Caruso.

Hershman predicts interest rates will remain low for the next five years baring some unforeseen circumstance or crisis like a war or another pandemic.

Westbrook said the low interest rates are a plus for her clients looking to buy a house because they can purchase a much more expensive home and have smaller mortgage payments.

For people who are already homeowners, she said they will be able to get more cash out of their homes with refinancing.