What Does the Emergency Fed Rate Cut Mean for Mortgage Rates?
Mortgage Rates Have Dropped to 3-Year Lows in Response to Global Economic Uncertainty
The Fed made an emergency move to lower the Federal Funds Rate on Tuesday, March 3, 2020. This rare move by the central bank was made in response to global concerns of an economic slow-down due to the coronavirus outbreak. The Fed cut the rate, which is the rate depository institutions lend reserve balances to other depository institutions overnight on an uncollateralized basis, by a half-point to a range of 1% to 1.25% in between its regularly scheduled meetings.
Will the Fed Rate Cut Affect Mortgage Rates?
Although the Fed rate cut does not affect mortgage rates directly, the Fed funds rate is indirectly tied to mortgage rates. And most likely mortgage rates will fall even more in the near future as investors flee to safe-haven asset classes, like the 10-year Treasury note, which move with mortgage rates. The Federal Reserve adjusts short-term interest rates for bank to bank lending, while mortgage rates vary based on long-term bond rates. Current mortgage rates are already at three year lows. The 10-year Treasury note fell to an all-time low of 0.935 percent Tuesday, the first time ever it has dropped below 1 percent. Recently investors have fled to the safety of bonds as the U.S. stock market drastically fell. Many mortgage professionals believe rates will bottom around 3% for a 30-year loan. 30-year Mortgage rates in the Lewisville-Clemmons area are currently in the 3.25-3.5% range.
Low Mortgage Rates and Low Housing Inventories
With low rates and an abundance of home buyers in the current real estate market, banks don't need to lower rates to stimulate activity. Low housing inventories combined with low rates, and a plethora of new home buyers has created a strong demand in the local and national housing markets. Additionally, there has been a large number of refinances over the last few months.
Are Thinking of Buying or Selling a Lewisville-Clemmons Home?
As you can see it's a great time to both buy and sell a home. Low rates mean buyers can afford more home, and low inventories help owners sell quickly for near list price (if priced right). The current Lewisville-Clemmons sale to list ratio is 97.9%. If you are looking to buy or sell a home, please consider Green Haven Realty. We promise to put your interests first. We're here to help! Call/text 336.462.9544 today!