The Federal Reserve announced a second emergency fund rate cut on March 15, 2020. Since then, we have been receiving numerous inquiries concerning the hype surrounding the federal fund rate drop that is ranging from 0% to 0.25% mentioned in a press release by Jerome Powell Chairman of the Federal Reserve. There are a lot of misleading articles and confusing comments of mortgage interest rates online and on social media right now. However, mortgage interest rates have increased since the Federal rate cut.
The Federal Reserve has aimed to maintain economic stability and has impacted bank lending rates since the global financial crisis of 2008, but mortgage rates are not determined by the federal fund rates alone. The Fed has used its tools, “quite aggressively…” but that, “action from Congress to soften the pandemic’s blow to the economy is critical. It’s very hard to say how big the effects will be on the economy. That’s going to depend on how widely the virus spreads, which is something highly uncertain and I would say unknowable,” Powell stated in a press conference on March 15, 2020. FOMC Press Conference Video
So, what does this mean for mortgage interest rates? Well, it could mean there may be another wave of dropping interest rates after the “15 Days to Slow the Spread” guideline released by the CDC on March 16, 2020. The President’s Coronavirus Guidelines for America was also released on March 16, 2020, with updated findings which assist in determining where we stand on the coronavirus count and the statistics of the virus. More than likely, the President’s guidelines will play a huge role in the direction the interest rates will go. “You CAN, however, probably get a lower rate at some point in the coming weeks thanks to the Fed’s invigorated mortgage bond buying efforts. Lower rates aren’t immediate or guaranteed, so make sure your originator has what they need from you in order to lock in when and if your desired rate becomes available,” Matthew Graham of Mortgage News Daily stated. Mortgage News Daily 3-15-2020
In summary, I think it is in your best interest to get ahead of the curve. If you are interested in refinancing in the future, call or email us and we would love to review your file and add you to our rate watch list!