COVID-19 and Mortgage Rates: What’s Really Going On?

March 17, 2020 by Joe Grunnet

As you have probably heard, the Federal Reserve cut interest rates to zero over the weekend. This news may have caused confusion for many. First, let us start by saying that this does not directly impact fixed mortgage rates. The Fed dropped the federal funds rate which impacts short-term and variable interest rates such as home equity lines of credit (HELOC).

Here are answers to the most-asked questions about the announcement:

How does this affect mortgage rates?

This does not directly impact fixed mortgage rates. It will help keep mortgage rates in a happier zone, under 4%. It will also pave the way for a return to 3% or below rates in the coming weeks.

Does this affect people who have already locked in their rates?

If you have already submitted an application for either a new loan or a refinance, your rate will stay the same and move forward as planned. For those who were looking to refinance or secure a new home loan, now is a great time to start the process. Rates are low and are expected to stay that way.

How will this impact the real estate industry?

 For now, it’s “business as unusual.” While there are new developments every day, we want to ease your mind and remind you that this is not like the last housing crash. There are many reasons indicating our current real estate market is nothing like 2008. Ali Wolf, director of economic research at the real estate consulting firm Meyers Research, addressed this point in a recent interview:

“With people having PTSD from the last time, they’re still afraid of buying at the wrong time.”

We understand that many people are hesitant to start their home search or think about selling. While we may have to get creative, there are still many ways people can tour homes or prepare to sell.

Reach Out with Concerns

 We fully understand that we are walking into an uneasy time. However, at DRG we are committed to one thing: ensuring our customers have the best real estate experience possible. We are doing everything we can to not only ensure the safety of our clients, but also continue to push forward in helping our clients achieve their real estate goals. Feel free to reach out to one of our Urban Realtors if you have any questions or concerns.

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