Mortgage rates could dip again, after recent moves by the Federal Reserve to prevent a coronavirus-led recession.
Market watchers say the Feds announcements Sunday to cut interest rates to 0% and begin purchasing $200 billion in mortgage-backed bonds will help keep home loan rates down.
“There are a lot of factors in place for rates to go down,” said John Rapasky, president of Scottsdale-based Counsel Mortgage Group, about the government's economic decisions.
Homebuyers or homeowners wanting to refinance won’t see rates plummet to levels like the Fed's 0% rate. But lower mortgage rates will help spur more buyers and save homeowners money on their monthly payments.
“The Fed rates and mortgage rates are cousins, although they are not tied together,” said Dean Wegner, branch manager of Guardian Mortgage of Scottsdale.
He said when the overall cost of borrowing is reduced it typically is reflected in mortgage rates, but not necessarily right away.
Mortgages are long-term loans with rates that typically follow bond yields, instead of short-term interest rates like the one the Feds lowered from 1% to about 0%.
The average rate on a 30-year mortgage dropped to a record low of 3.29% two weeks ago, which spurred an increase in refinancing. Rates ticked up on that demand for loans last week, despite the coronavirus crisis.
“We’ll have to see if the rates come back down over the next couple weeks,” said Rapasky.
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