Floridians thinking of buying a home may be following the news and wondering if there will be a recession, and if so, how that might impact mortgage rates.
While a recession is a negative event on the whole, it does have a silver lining in that mortgage rates can fall. Let’s take a deeper look.
Are the Chances of a Recession Increasing?
With how unprecedented and uncertain the national and global situation is right now, we don’t want to speculate about the economy. So, we will turn to see what experts are saying.
The BBC reports, “A JP Morgan report put the chance of recession at 40%, up from 30% at the start of the year … while Mark Zandi, chief economist at Moody’s Analytics, upped the odds from 15% to 35%, citing tariffs.”
Mortgage Rates Tend to Drop During a Recession
Let’s say that a recession does happen. Hopefully it won’t, but right now it is worth taking under consideration while making financial plans.
Recessions are defined by declining economic activity. That includes activities like spending money or taking out loans.
In order to try and offset that reduced activity, the Federal Reserve attempts to stimulate the economy via policy changes. That includes setting new interest rates.
Taking out a loan is more affordable when interest rates are lower. So, the Fed tends to reduce interest rates. That can include mortgage rates.
Buying a Home During a Recession
While a lot of people struggle during a recession, others may have stable jobs and incomes, or even find opportunities for professional growth. If that is you, then it could be a prime time to purchase a home.
Shopping for a home during a recession lets you capitalize on reduced mortgage rates. Here are a couple tips that can help you make a home purchase that will serve you well now and in the future:
- Work with a mortgage broker: A broker works with a network of lenders, and offers a variety of different types of home loans. As a result, a broker is able to bring you competitive mortgage rates. Even during times when rates are low, it makes sense to shop for the most affordable rates, rather than just settling on the first rate you find. The broker can do the hard work for you and bring you those rates.
- Plan for disruptions: Hopefully you can weather a recession without financial disruptions, but you should have contingency plans in place. Consider spending a little less on a home than you can currently afford to give yourself some financial padding.
Buy a Home or Refinance in Florida
Although recessions can bring financial challenges, they also can lead to decreased mortgage rates. For buyers who can afford to purchase, that represents an opportunity to lock in an affordable rate for the years to come. To buy a home or refinance in Florida, please give us a call at 954-840-8811.
