Today we’re going to discuss interest rates.
Bob Nelson, Eugene real estate investment broker
Marcia Edwards, Eugene residential real estate broker
Marcia Edwards: Just the other day I saw an article that shared what the interest rate story has been over time. The interest rates for mortgages have been phenomenal, and we keep thinking it can’t get better than that, and then it does. But it will not always be this way.
Bob Nelson: No, it won’t. In fact, it’s interesting right now, if you study carefully what’s causing the interest rates to be of this nature. Basically the foreign investor that is placing small… Excuse me, short-term money, not small money, short-term money looks for a safe place to store it and government treasuries seem to still be the most attractive investment.
Now, one other thing, this coronavirus is causing unusual disturbance in the investments market. The stock market gets wowee and 880 point loss.
Marcia Edwards: Yeah.
Bob Nelson: I mean that’s a whopper. That’s worse than Black Monday a few years back. I mean that’s amazing, and that’s all being related to this coronavirus.
Marcia Edwards: That’s right. It seems so temporary in some people’s minds.
Bob Nelson: Yeah.
Marcia Edwards: It seems so manageable. At the same time, it’s very volatile. And when you think about it, it’s manufacturing. The workforce is down, and if the workforce is down, so will the production be.
Bob Nelson: Yep. And what do you do with your money during this brief period of time? You buy treasuries. Well, as the rate on T-bills drops, and as the rate on 10 year treasuries or 20 year, or so forth, as it declines, lenders lend with a hedge or a spread over that rate. So as that drops, the lenders can go longterm with their loans knowing that there was commercial or typically a 10 year obligation. It’s a fairly safe deal. Take advantage of this. Folks, take advantage of this.
Marcia Edwards: Yeah, we’re trying to create urgency to stay because this will not always be this way. I know some of you, and during your lifetime you haven’t seen much different rates in this, but we have. And we just want to let you know that a longterm commitment on a home… You can buy so much more right now than you could previous markets because of the change, just the shift in interest rate. The interest rates are more appealing than the appreciation in the market over this period of time.
So you’ve got a significant impact that will offset the increase in price over time. So take a look at what you’ve got in your current loans and what you’re doing to finance your next property soon.
Join Eugene, Oregon, real estate experts: Bob Nelson, Real Estate Investment Broker with Pacwest Real Estate Investments, and Marcia Edwards, Residential Real Estate Broker with Windermere Real Estate, daily at 5:30pm on KPNW for the “Real Estate Today” radio show.