EDINA, Minn. (WCCO) — The stock market sell-off has created a silver lining for consumers: surprisingly low interest rates.
Many analysts say the low rates are coming as a shock. They expected the debt downgrade to result in higher borrowing costs but instead, the unstable stock market scared off investors and instead they flocked to the U.S. Treasury. In turn, this pushed down interest rates.
Those low interest rates mean big business in the mortgage and car industries.
“It’s been wild. I mean the last week has been absolutely insane,” said Ben Coulter, Mortgage Consultant with Metropolitan Financial Mortgage Company in Edina.
Coulter said the explanation comes with one look at the numbers: the interest rate for a 30-year fixed mortgage is hovering around 4 percent.
“Near all-time low, I’ve seen it lower only one other time,” said Coulter. “Typically, its hours where you can grab that low rate and this time, it’s been a couple days.”
Those couple days have translated into savings for his clients ranging from $180 to well over $750 saved per month.
The low rates are also soliciting those buyers who’ve been on the fence to jump. Employees at Keys Cadillac in Edina say they see the same motivation on their car lots.
“The mentality is, ‘Gee, I’m in the market for a car, what are my costs of doing it?’ When you consider the fact that the money is free, they’re like, ‘Well, gee, let’s take a look at it,'” said Michael Stanzak with Key Cadillac.
Banks and credit unions also say the amount of people who want to refinance their auto loans is up. It makes sense when you look at the drop in interest rates on used cars.
“It probably came down 3 to 4 percentage points with the sub-vented rate. So going from 5 to .9 can be substantial if you finance $20,000 to $25,000,” Stanzak said.
As far as finding the most competitive interest rate, you’ll have to shop around to both banks and credit unions.
The mortgage brokers say their best advice? Shop where you trust. First, check out the rates where you do your checking and savings. Then ask the people you know about who they recommend.
The experts say history shows these kinds of rates are short-lived. They say if you are thinking about refinancing, you should do it before it’s too late.