We wish you and your family health and comfort during this difficult time. During this Shelter In Place, I am not holding any open homes or showing any property. We all have to work together and keep our distance to get through this uncertain time.
Now, about the Fed’s interest rate cut, here are a few key points:
The Fed did two notable things this week; they made two emergency rate cuts, designed to inject funds into the economy and stimulate growth, and they will purchase at least $200 billion of mortgage-backed securities.
The rate cut will make it easier for companies to acquire cash in order to keep operating. These impacts are not likely to be directly felt by consumers.
What the Federal Reserve’s Interest Rate Cut Means for Consumers
The government will purchase mortgage-backed securities, allowing banks to then offer more mortgages, which will hopefully bring some stability to the housing market. Refinancing is also at an all time high.
The FDIC is relaxing a rule that would have gone into place in order to free up lenders to more easily do their thing.
FDIC Seeks Breathing Room For Banks To Help Small Businesses Survive The Coronavirus
Does the 0% interest rate mean mortgages will be at 0%? No, the Fed’s 0-0.25% basis rate is then marked up by banks by a couple of percentage points before it is applied to mortgages. This markup, called a spread, is how banks make a profit and cover costs. It is expected that mortgage rates may fall again, so waiting a bit to refinance may still be a wise option.
Mortgage Rates Likely to Fall Again
Are we headed into another recession where the housing bubble bursts? Most likely not because the Great Recession was caused by reckless lending practices, and the rules that were initiated to shore up the lending practices are still in place now.
What Really Caused the Great Recession?
Please get in touch if I can be of any assistance. We’ll get through this together!
-Kristen