Dip in Mortgage Rates: What’s Happening in the Global Market?
Coronavirus has badly hit the global economy. One of the sectors which have received a considerable blow is mortgage. Its rates have dipped to record all-time low levels and may move even lower if the pandemic shutdown continues.
Mortgage rates underwent a significant difference in the year 2008 when the world’s first wave of the global recession hit, but the graph was not as low as this year. From a 4.07% rate, it has dipped to 3.23%. What may be shocking, though, is that the Federal Reserve plans to keep the interest rates at 0 percent.
Triggers behind the dip in mortgage rates
Federal Reserve’s bond-buying policy
Federal Reserve officials usually try to buy government as well as mortgage-backed bonds aggressively. They keep the interest rates near zero in difficult times to stimulate and stabilize the economy. They have taken such steps in the past as well, and this is currently being done as well.
Price inflation and supply-demand chain in the market
The need for homes being put up for sale and mortgage is lower these days. Therefore suppliers or lenders have lower down the interest rates. The same is the effect of price inflation over the loan rates.
Harmony with 10-year treasury
Mortgage rates usually run with the 10-year treasury. Federal Reserve institutions do not have any direct influence over the yields. However, there are conditions when investors get pushed towards the safety of 10-year treasuries. This happens due to the cutting down of the federal funds rate. The result is lower mortgage rates.
Points to remember while opting for a lower mortgage rate
Accessibility of lowest mortgage rates
Although the Federal Reserve has announced a zero percent interest, it is not accessible by a more significant section. The borrowers with higher credit scores have better chances of locking in the lowest mortgage rates, but they too won’t be able to bag zero interest rates. Based on the Federal Reserve’s policy, people with lower credit scores have ample time to raise their scores.
Even if you feel stuck in today’s challenging time, you must still find a lender you can trust. It is advisable to approach them again if you already hold a relationship with them through business in the past or if he is a friend, family, relative, or co-worker. You shouldn’t look for your benefit only. Relationships matter too.
The decrement in interest rates and steps taken by the Federal Reserve are beneficial for homeowners. Consequently, they are likely to have more time to lock in a low mortgage rate. However, as soon as the pandemic is over, the businesses will be back to normal. Then the lenders are expected to come back in the market, and the interest rates too are expected to rise.
More in Loans & Mortgages
If You’re Struggling to Pay Rent or Mortgage During COVID-19, These Tips Will Definitely Help You Out
Let’s face it- when talking about monthly bills, your rent and mortgage bills sit right at the top of the list....June 26, 2020
Struggling to set your Career straight? Take a look at These Tips that are Sure to Help
The pandemic has created havoc in many industries, and thousands of people are left without jobs. If not entirely out of...June 26, 2020
How to Build a Successful Career in Event Management – Expert Tips
Unlike earlier times, today’s younger generation has a variety of career choices. Current opportunities are usually based on either the global...June 23, 2020
Struggling to Figure Out Your Next Career Move? Here’s How You Can Keep Your Professional Progress On Track With These Expert Insights
We know that planning your next career move is the last thing on your mind right now. With companies closing and...June 23, 2020
Financial Mistakes Most Millennials Regret Making During College
Getting ready for college could be one of the highlights of your life, personally and professionally. A lot of opportunities open...June 17, 2020
Here’s How Americans Are Spending their $1,200 Stimulus Checks
When the Great Recession wreaked havoc in the economy in the late 2000s, Americans received stimulus checks from the federal government to help...May 20, 2020
Students Looking for Extra Income Can Apply for These Three Online Jobs
Students usually have limited budgets. And with unexpected expenses threatening to mess with those funds, most of them are now considering...May 15, 2020
The Five Most Important Things You Need To Consider When Getting a Personal Loan
A personal loan means borrowing from a lending entity, may it be a bank or some other credit provider. It’s...May 15, 2020
A Step-by-Step Guide on How to Spend Less and Save More in 2020
Most New Year’s resolutions involve the phrases “spend less” and “save more”. However, a lot of people end up failing to...May 13, 2020