Money is On Sale
Imagine you paying the bank, instead of them paying you, to keep your money. (more on that in a minute).
Mortgage rates recently hit near all time lows. Today, rates are near 3.5%. The long-term average, going back 40 years, is near 7.5% So, essentially money today is on sale for half off!
This can be confusing because the U.S. economy is growing. Shouldn’t rates go up as the economy gets better? Yes, but…
The global economy is weak right now. So weak in fact that 500 million people world-wide live in an environment of negative interest rates.
What that means is, instead of the bank paying the customer interest, the customer pays the bank to keep their money. The policy is designed to encourage people to take their money out of the bank and infuse it into the economy.
It’s not clear yet if the policy is working in these countries, but here’s the deal for us. Home buyers are benefiting in a big way. And, the low rates, along with a robust local economy, are fueling big home price gains which is obviously good for sellers.
The global economy is sure to turn around at some point and rates are sure to go up at some point. In the meantime, enjoy the money sale.