I’m writing today, Monday, March 16th, to give you a brief update on interest rates in light of the breaking news regarding the Fed rate cuts that likely crossed your screen earlier today (I’ve heard from several of you already).
I want to share that I hope everyone out there is safe and secure. These are certainly scary times and we are all being impacted, directly or indirectly by the spread of COVID-19. Please be well.
Earlier today, the Fed cut interest rates to their floor, the lowest level they can go. This move does not directly move mortgage rates. The rate the Fed controls applies to overnight lending. Mortgage rates are based on longer term loans, mainly the 10 year Treasury bond, and even this correlation doesn’t always hold up, especially during volatile times like were experiencing now.
Here’s an article that dives deeper into this:
So, while the Fed’s rate cut COULD translate to improved mortgage rates in the coming days/weeks we really can’t be sure.
Here’s what I do know:
If you currently have a locked rate with me, you are in great shape and should plan on closing with that current rate. Why? Because this past week mortgage rates moved up from their all-time lows by anywhere from 0.5% to 0.75% compared to the week before. It was unexpected and drastic.
Here is a good article explaining what happened:
The good news is that nearly all of you who are locked in with me were locked before this past week and therefore got a great rate prior to the rate surge. A few of you who locked a jumbo rate with me this past week are also in good shape as one of my main jumbo lender’s kept their rates lower the entire week before raising them on Friday.
If Today’s Fed rate cut does help mortgage rates, it will NOT immediately erase the big increase in rates from last week. It could take days or weeks if at all. Remember, we have a LOT of ground to make up to recover from this past week’s pop in rates so don’t expect there to be anything better than your locked rate from prior weeks.
If you currently have an unlocked rate with me either because we missed the boat before rates moved up this past week or we are just getting started now, things have become a bit more promising. As I mentioned, we may not get back to the all-time lows we saw the week before last, but we should see better rates this week and that could be enough to lock you in. Check-in with me this week and we’ll run numbers and make a decision.
If you have outstanding items I or my team has requested please do your best to get them in so we are best positioned to get you closed quickly.
If you have any questions about this or anything else please email, call or grab a slot on my calendar below.