Average 30-Year Fixed Mortgage Rate At Record Low: Who Is Buying?

For the longest time, I’ve been a proponent of the adjustable rate mortgage (ARM). Paying a higher rate for a longer duration than necessary doesn’t make economic sense. However, when the average 30-year fixed mortgage was under 3% in 2021, I no longer was as biased against 30-year fixed-rate mortgages.

A sub-3% average 30-year fixed mortgage rate was so low, it must have spurned more people to buy homes. Unfortunately, in 2022, the average 30-year fixed rate mortgage has reached almost 6% due to high inflation and an aggressive Federal Reserve.

If you’re looking to refinance, check the latest mortgage rates online. You’ll get real, no-obligation quotes from competing lenders in minutes. Take advantage of the current mortgage market abnormality!

With the global pandemic in full effect in 2021, I was curious to know who was buying a home then. Let’s read some homebuyer profiles of people who were taking advantage of record low mortgage rates.

Average 30-Year Fixed Mortgage Rate At Record Low: Buyer Profiles

The one thing every homebuyer or potential homebuyer has in common is that all of them have not been financially hurt by the pandemic. Instead, most are now wealthier during the pandemic than pre-pandemic.

These people are taking advantage of the record low average 30-year fixed mortgage rate. Financially savvy people are also focused on buying up as many rental properties in big cities again.

Here are their stories of people buying homes during the middle of the global pandemic.

Who Is Buying Real Estate #1: Big Tech Employee

The NASDAQ closed up over 45% in 2020. As a result, many of my tech colleagues are all looking to buy their first homes or upgrade homes. I work at Apple and Apple stock is up around 28%. As a result, my colleagues and I feel much richer today than we did before the pandemic began. It’s weird.

One of the best moves I ever made was not going to a small start up three years ago. They were gonna give me huge equity that would’ve made me tremendously wealthy today if things panned out. However, the start up is struggling with cash flow, while Apple continues to dominate.

With our net worth up ~20% in just six months, we decided to buy a bigger house for our family of five. The average 30-year fixed-rate mortgage rate at under 3% is just icing on the cake. I’m gonna follow your advice and get a 7/1 ARM for 2.375% since we plan to pay off the home in 7 years.

Turning stock market gains into a real asset feels great to me. We are not unique. Most of my tech friends are diversifying their stock gains into real estate.

Who Is Buying Real Estate #2: Sick & Tired Of Being Overly Frugal

For over 10 years, I’ve been saving between 20% to 50% of my after-tax income. My income has also gone from $80,000 to $165,000 during this time frame. But I’m still renting a studio apartment from when I was 25 years old. I’m sick and tired of hoarding so much cash. What’s the point if I’m not going to spend it?

Living in a studio apartment has helped me save about $160,000 in living expenses. At the same time, the studio apartment has also cost me money. If I had just bought a property I was looking at back in 2010 for $300,000, it would now be worth more than $500,000 today. I would have also gotten to enjoy a nicer place for all these years as well.

Although I’m happy to have saved a lot over the past 10 years, I feel it’s now time to use my savings to improve the quality of my life. I’m 37 years old and want more space. I want to get married and start a family too. The average 30-year fixed mortgage rate under 3% is too enticing to ignore.

Who Is Buying Real Estate #3: Parents Who Plan To Permanently Work From Home

With work from home likely becoming a permanent trend, I think it’s smart to try and buy a home now before open houses go back to the norm. Eventually, the economy will open up and buyers will return in droves.

All of my friends with kids are fearful of venturing outside. They don’t want to get sick or their children sick. I have friends who are too scared to even set up a private showing because they don’t want to breathe the indoor air that other people have breathed.

I can understand the fear, but come on. The death rate is so low, I think some people are being overly precautious. Absolutely wear a mask out in public though. Be respectful of other people’s health.

Now with the average 30-year fixed-rate mortgage so cheap, I feel more people will eventually come around to buying.

This debilitating mentality of not wanting to venture outside is eventually going to dissipate. When it does, I think bidding wars will be the norm again.

We are looking to buy a home that has two separate areas where my husband and I can work privately. We are also looking for a home with a nice yard or deck. If there’s a view, even better.

Finally, we already refinanced our existing primary home mortgage through Credible to get the lowest rate possible. Once we settle into our new home, we will then rent out our old home and generate passive income.

Who Is Buying Real Estate #4: It’s Now Cheaper To Buy Than To Rent

The media likes to talk about a decline in rent prices without talking about a bigger decline in mortgage prices. Maybe this asymmetric reporting is a way for the media to try and “stick it to landlords” since the media knows that’s what readers like.

However, if rent prices are down 10% and the average 30-year fixed-rate mortgage rate is down 30%, then owning has become relatively more affordable. Like duh. Such an obvious comparison that everybody seems to be missing.

In my city, buying is now cheaper than renting because mortgage rates have declined so much. There is a buying frenzy for starter homes and homes around our city’s median price.

I’ve moved up the price curve, along with several of my friends to find better value. With more people spending time at home, there is logically going to be more demand for homes.

Who Is Buying Property #5: Homes For My Children

I have older friends whose adult children decided to break their lease and move back in with them. Frankly, after four months of sheltering-in-place, they are sick of their children!

They want them out, paying their own rent, and experiencing more hardship. It’s this hardship that’s going to help make them get stronger in the future. One friend regrets letting his son back home at all. Now, every time he faces a hardship, he fears his son will just want to come home.

I figure, if rolling lockdowns are going to be the norm, then I would rather invest in properties today. The properties will be viewed as investments now and places for my children to stay in 15-20 years if needed. My kids are 7, 9, and 11.

In 15-20 years, when my kids have jobs, I think they are going to wish I had bought more property today. In 15-20 years, I will probably have paid off at least one property as well. I’d like to lock an average 30-year fixed-rate for under 3% before an economic rebound.

Given I’m investing for a 20+-year time horizon, I’m not worried about short-term price volatility. I know there’s risk to buying property now. But I’m seeing some relatively good deals.

Who Is Buying Housing #6: We Found Our Dream Home

We live in a neighborhood with incredible ocean views. However, not all homes have ocean views. Only homes on the west side of the block do. If your home is on the east side of the block, you’re usually facing homes on the west side of the block, unless you built an addition.

In the past, every time a home with views went on the market, it would be snatched up within days. Even run down homes on the west side of the block would be purchased quickly. Thankfully, we stumbled upon a home that curiously decided to list in April, 30 days into shelter-in-place! Because April was the scariest and most uncertain month so far, few people were buying homes.

There was little competition and we were able to buy our dream home with views and more space for about 10% less than what the home would have sold for before shelter-in-place began. The home is also remodeled and ready to go.

After waiting for three years, we can’t believe our luck. Even if it takes a while for the housing market to recover, we’re thrilled to live in a nicer home for the next 10 years. Our finances are strong because we both are working from home. Our investments are also back to where they were at the beginning of the year.

Who Is Buying Property #7: I’m Going To Propose To My Girlfriend

I’m 26 years old and plan to propose to my girlfriend later this year. As a result, I am buying a two bedroom, two bathroom condominium for $560,000. The asking price was $580,000.

I came up with $30,000 of the downpayment, and my parents came up with the remaining $82,000. My uncle even offered $20,000, but I refused.

My girlfriend currently rents a room for $1,300 a month. She’ll move in with me and we’ll see if we can rent out the second bedroom for extra income.

Who Is Buying #8: We See Investment Opportunity

Whenever there is some sort of financial crisis, there is investment opportunity. We are buying single family homes in San Francisco that are 50% higher than the median price point because there is better value. Jumbo loans are harder to get at the moment, so we are taking advantage of less competition.

We’re also looking for distressed commercial real estate opportunities on platforms like Fundrise and CrowdStreet. These companies are working with sponsors who are looking for the same opportunities. If priced low enough, some office buildings and hotels could be very attractive if the economy opens back up.

I especially like searching for deals in 18-hour cities with CrowdStreet. There should be a permanent trend of Americans relocating to lower-cost cities.

We’ve surveyed thousands of employees who say the ideal work environment would be 2-3 days in the office a week, 2-3 days at home. Office buildings are here to stay and travel will return.

The Wealth Gap Will Likely Widen

It is an incredibly weird time to buy real estate right now. Hopefully these stories and the subsequent comments in this post have provided you with more insights on who is buying today.

On the one hand, there are tens of millions of people unemployed or underemployed. On the other hand, the average mortgage rate for all durations have hit record-lows. Meanwhile, millions of stock investors who held on now have record-high or close to record-high portfolios.

After this recession is over, sadly, the wealth gap will likely widen even further. If you’re out of a job, there’s no way you’re going to buy a house, let alone get preapproved for a mortgage. But if you have a job, you can take advantage of such great discounts. These opportunities are the reasons why we financially prepare for so long.

The cities that continue to have strong job prospects will likely get even more expensive over time. For every one person who leaves, there is likely going to be 1.2 people who take their place. The decision to relocate to the middle of nowhere to save money is now being over-hyped.

Instead, we are creatures of habit. We like familiarity. If necessary, we will first look for cheaper places to live in our current cities. And we will find cheaper accommodations if we bother to look.

The Best Type Of Mortgage To Get

I’ve been a long-time advocate for getting an adjustable rate mortgage because interest rates have been coming down for over 35 years. With the average duration of homeownership around 8 years, it’s not optimal to pay a higher interest rate with a 30-year fixed or 15-year fixed term.

However, there is a mortgage market anomaly right now. The average 30-year fixed and 15-year fixed rate mortgages are offering better deals than the typical 5/1 ARM.

To pay off your loan quicker and save, consider getting a 15-year fixed mortgage. If you have the cash flow, you’re going to feel great paying off your mortgage quicker. Less interest payments always is nice.

With stock market wealth near all-time, it almost feels like investors are on cheat mode. Add on the fact that millions of people now get to make the same amount of money working from home, the housing market is likely to stay buoyant.

Achieve Financial Freedom Through Real Estate

Real estate is my favorite way to achieving financial freedom because it is a tangible asset that is less volatile, provides utility, and generates income. Stocks are fine, but stock yields are low and stocks are much more volatile.

The combination of higher rents and higher asset values make real estate a tremendous long-term investment. Further, high inflation provides a positive tailwind for real estate.

Take a look at my two favorite real estate crowdfunding platforms that are free to sign up and explore:

Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing. The vertically integrated real estate platform manages over $3 billion in assets and has over 300,000 investors.

CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends.

I’ve personally invested $810,000 in real estate crowdfunding across 18 projects to take advantage of lower valuations in the heartland of America. My real estate investments account for roughly 50% of my current passive income of ~$300,000. 

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