Federal Reserve Cuts Rates to ZERO - What This Means

Federal Reserve cuts rates to zero to support the economy during the coronavirus pandemic - does this mean mortgage rates will be 0% now?

Here are a few important facts:

- The Fed cutting the Fed Funds rate down to zero does NOT mean mortgage rates are zero. The Federal Reserve Rate is NOT the same as the Mortgage Rate.

- Refinance volume the last few weeks has been so high that there aren’t enough investors to purchase the debt. As old economics tells us, too much supply and not enough buyers result in lower prices.  Lower prices on mortgages mean higher rates.

- The record surge in refinances has resulted in lenders actually raising rates in order to slow the influx of business. (Crazy isn’t it!?)

- The Fed committing to purchase large amounts of Treasuries and Mortgage-Backed Securities (MBS) will eventually help rates as it lessens the supply in the market but it isn’t going to happen overnight.

For more information, I recommend contacting your mortgage lender - they are your mortgage experts who are licensed and able to tell you exactly what's going on in the financial world pertaining to your home mortgages.

You can also check out this article by CNN.


Stay safe and healthy!