Jonathan Rezk, of Carrolltown, said he refinanced his mortgage with AmeriServ Financial. With cash he gained through refinancing, he can build a garage – if he can find a contractor who’s not already swamped with work, he said.
“Contractors are very busy.
“They are all backed up with work. I may have to hold onto that cash until next year,” he said.
Residential mortgages for new houses as well as refinancing plans for existing loans are surging both nationally and locally, AmeriServ Financial President and CEO Jeff Stopko said.
“We are having record levels of mortgage refinancing,” he said.
The Federal Reserve system lowered the federal funds rate that banks charge to each other for short-term loans. That action pushed down borrowing costs to help consumers and businesses handle the financial challenges posed by the coronavirus and the resultant months of economic shutdowns, the Fed’s website says.
The Fed’s action was made with the goal of stabilizing key credit markets – including auto loans, mortgages and small-business loans.
With less money owed on debts, people can do more to stimulate the economy, Stopko said.
‘Record lows right now’
After Rezk refinanced his mortgage, the interest rate came down to 2.75%. He said he could have gotten a lower rate, but he used the equity built up in his house to opt for a cash-out refinance, replacing his existing mortgage
with a new home loan for more than he owed on the house so that he could use the difference to spend on building a new garage.
“It’s worth the call to your bank to get numbers, because there’s no way rates can stay this low forever,” Rezk said.
Stopko said there’s no telling how long interest rates will stay low.
“That’s a tough one to predict,” he said. “It depends on the Federal Reserve’s next actions. Right now, you can factually know that interest rates are at record lows right now.
“This might be a good time to consider looking into refinancing.”
Mortgage rates and home equity loans are both down, he said.
“Thirty-year mortgage rates are between 3% and 3.5%,” Stopko said. “It’s been there for a couple months. By historical standards, that’s a great rate. It was between 4% and 5% a year ago. It makes a difference in a payment, it really does.”
‘Tides are changing’
As a result of low interest rates and the real estate market opening back up for property showings, real estate agents said the housing market is burgeoning after months of being bottled up.
Cambria and Somerset counties entered the “green” phase of Gov. Tom Wolf’s COVID-19 reopening plan June 5. For the real estate business, that meant agents could show properties for the first time since March.
Robert Colvin, associate broker and owner of Re/Max Team Realtors, said Cambria and Somerset county housing markets are “extremely active.”
“Buyers are comfortable with seeing homes with green-phase showing instructions,” he said, “mask, 24-hour notice, maintaining social distancing, no touching or using bathrooms, limiting the number of people in the home.”
He said he is busy, listing and selling more than 70 pending files with more than 40 homes listed since Re/Max Team Realtors returned to business earlier this month.
“The tides are changing to a seller’s market,” he said. “We are experiencing multiple offers on homes and some are selling above the list price. It seems to be all age groups and price ranges are buying and selling homes.”
‘Getting multiple offers’
Coldwell Banker Prestige Realty agent Adam Dugan agreed.
He said buyers typically don’t have to bid higher than asking price for a house in Johnstown, but that’s changed since low mortgage rates have people clamoring to buy houses.
“It’s a seller’s market,” Dugan said. “A lot of houses are getting multiple offers. I’ve lost a few offers, one offer in Westmont that had seven offers on it. It’s not uncommon to see two or three offers – but seven – that’s the most I’ve ever seen.
“Another house in Richland had four, five, six offers on it as soon as it opened.”
In one of those cases, Dugan said his clients’ offer was $5,000 over the asking price – and they still lost out.
The demographic, he said, seems to be first-time homebuyers.
“Since the caronavirus shutdown ended, it’s been like this,” Dugan said. “There are a lot of listings coming on to the market, and there are a lot of showings. Everybody is just swamped.
“Usually the busy part of the spring season is spread out, but the coronavirus bottled everybody up. It’s got to slow down at some point.”