The Federal Reserve Bank (the Fed) moved to lower the federal funds rate by a half-point to a range of 1% to 1.25% March 3 in response to the “evolving risks” of the COVID-19 corona virus outbreak. The Fed doesn’t directly impact housing loans, but they generally move in tandem.
Mortgage rates in the U.S. roughly track the yield on the 10-year Treasury note which has been dropping as the corona virus epidemic expanded. As the yield on the 10-year note drops, there is typically a drop in mortgage interest rates.
Yesterday, purchasers and refinance borrowers were looking at rates of about 3.7%. Today that’s about 3.5%. Some lenders are forecasting that rates could drop as low as 3% before COVID-19 is controlled.
Some analysts report that the stock market anticipates a least a quarter-point rate cut at the Fed’s meeting in April.
Around the world some other central banks have dropped rates as well. Since consumer spending is a large measure of our economys, there is reason to press for more cuts.
In the words of the President, @realDonaldTrump, “The Federal Reserve is cutting but … more easing and cutting!”
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